|
I
counsel a lot of people about money. I
see the same mistakes being made over
and over again.
If you’ve made ‘em, don’t
worry. I’m here to help you do it
right this year! The fact is, moneymakers
need a money coach, just like gymnasts
need a gymnastics coach.
As your MoneySmart coach, here are
the mistakes in thinking and behavior
I want you to avoid:
Don’t
think of your refund as free money –
or lottery winnings. It’s not! That
refund is your hard-earned dollars that
you loaned Uncle Sam interest free –
all last year.
Don’t spend the refund – or
overspend it - when you haven’t gotten
the cash in your hands yet.
Don’t spend the whole refund to pay
down debt.
OK.
So now you’re MoneySmart about what
not to do with that refund in 2005.
Next, here are my easy MoneySmart moves
that you can make to best handle your
income tax refund this year.
First, divide your refund into thirds
– 3 equal amounts.
Why
3 equal amounts? Because we want to use
that refund – however small or large
– to handle the past, the present
and the future.
Use
one third to handle the past by paying
down debts. Start with your most pressing
debt…either the one with the highest
interest rate, or the one with the biggest
consequence for not paying it down.
Use
one third for something you need or want
in the present. If you can, use that money
to have some fun. Do something that is
nourishing to you – something that
makes you feel good. How about a mini-vacation,
or an evening of fine dining and great
entertainment, or a day at the spa?
Of
course, if the brakes on the car are shot,
or you have some other pressing need,
you’ll need to do that first.
Finally, use one third to handle some
aspect of your future. Here are several
MoneySmart suggestions for you to think
about.
1.
Put money in your Anti-Emergency©
Fund.
2. Put
money in your Rainy
Day Fund or save for your retirement
through your 401(k), 403(b), IRA (traditional
or Roth).
3. Put
money into college education funds (Coverdell
IRAs or 529 plans) for your kids or grandkids.
Why is this “thirds” approach
such a great idea? Because you'll be taking
care of a variety of wants and needs –
and taking several easy MoneySmart steps
forward towards your big goal of financial
freedom!
That
is how you can have more fun with your
tax refund in 2005.
As
always, if you have any questions, please
do email me at cindy@cindymorus.com. I’m
here to be your coach, and make sure you
succeed.
Cindy
PS…
Now
is also a GREAT time to “check out
your paycheck”:
-
Re-evaluate how much money you are contributing
to your 401(k) or 403(b).
-
If you got a whopping refund, remember
you were just sticking YOUR money in Uncle
Sam’s pocket. No point in giving
Uncle Sam an interest free loan! Adjust
your deductions so that you have just
enough taxes withheld from your paycheck.
:::
more articles by Cindy Morus
:::
more articles about Personal Finance
:::
ING Savings Account Information
|
