Emergency Fund, Taxes

What To Do With A Tax Refund

My wife and I filed our taxes this evening.  The process was pretty straightforward and only took a few hours.  We have a small refund heading our way – we plan to use it to help rebuild our long-term cash savings.

Over the years, we have used our tax refunds for:- funding our emergency fund, purchasing furniture for our new home, paying off credit card debt, and going on vacation.

In a perfect world, we would have our withholding dialed in, and our refund would be very, very small.  As many have stated before, there’s no reason to give the government a “tax free loan”.  The reality is, our income fluctuates each year, and we would rather play it safe and over-withhold, rather than get stuck with a tax payment at filing time.  Also, I had some business-related expenses that reduced my taxable income more than I had anticipated.

Over the past year, we have begun the process of rebuilding our cash reserves.  I had to deal with a series of medical expenses in 2016 -which cut into our savings.  The tax refund will go towards our six-months-of-expenses savings.

What do you plan to do with your refund?

Leave a comment below or connect with me via Twitter @NCN – and have a blessed day!