What are you doing with your tax refunds?

by J. Money -

banana dollar

Saw this list come out on the best ways to use your refund money, and thought I’d use it as an opportunity to live vicariously through you guys since I’m getting squat this year ;)

Though by no design of my own as I LOVE getting a nice chunk back every year and thinking about all the ways to power your goals! Even if it’s your own money we’re talking about! (And let me tell you – after just maxing out our Roth IRAs yesterday, it’s a LOT more fun using your “free” tax money than it is your “normal” money, haha… I felt the sting hard this time!)

So if you’re not one of those “I don’t give the government a free loan” type people, which is fine if you’re actually APPLYING THAT MONEY towards your goals every paycheck!, here’s an excellent list of ways you can use your newfound money for good.

Per MyBankTracker.com, with comments from yours truly:

The 10 Best Ways to Use a Tax Refund

  1. Build an Emergency Fund – Excellent route for anyone just starting out in their journey!
  2. Pay Down Your Debt – An excellent route for anyone no matter *where* they are in their journey! Especially if we’re talking about debts with 10%+ interest rates!
  3. Fund Your IRA – My go-to answer every year – with or without a tax refund :) Even if this was all you ever did every year you’d have hundreds of thousands to your name by retirement!
  4. Invest – Another great option, which I’m assuming refers to non-retirement accounts since of course most of what you do in retirement accounts is invest ;)  But maybe this could be a fun side pot to poke around and experiment with? Especially since again it feels like “free” money and wouldn’t affect you as much if you were more risky with your everyday money?
  5. Pay for Home Improvements – Or perhaps home improvement “wants” vs needs? ;) Especially those that’ll increase the value of your home over the years?? I remember once someone telling me you should do all of them while you’re *living in the house* vs before you go to sell it so you can actually ENJOY all the upgrades you do! Something we failed big time when we sold our first house, and now every time it pops back on the market and we see all those beautiful hardwood floors and kitchen cabinets I get sad that we never got to appreciate them :(
  6. Replace an Old, Inefficient Appliance – Sure, why not?! And pick up one that’s energy star compliant to help save the earth – and your electric bills – at the same time!
  7. Invest in Yourself – I always find this one the hardest to do regardless of how you come into cash, but I agree we need to be better about taking care of ourselves, both in terms of our minds/brains/bodies, but also just in our general well-being too. And a tax refund can be the perfect opportunity to treat yourself here that you might otherwise never do.
  8. Save for an Upcoming Expense – My Bank Tracker lists stuff like irregular expenses or real estate taxes (yaaaawwwn), but maybe you can stash some for more exciting expenses that are on the horizon if there is such a thing ;) (Road trip? International vacay!?)
  9. Make a Charitable Donation – And then get a tax write-off too! Hah! (Get it? A tax write-off on your tax return??!) But yes – an excellent idea as this world needs as much help as it can get these days… And might I recommend a few places I’m proud to support:
    • SundaraFund.org – An organization that recycles old hotel soap into new soap for those who don’t have access to any around the world, or even know what soap IS?!
    • Breadcoin.org – A new currency of tokens you can hand out to those in need, redeemable for food at local merchants here in the DC area.
    • TheGoodCemeterian.org – A two-person preservation team that restores old tombstones and then shares the stories of the people they honor to help their memories live on.
    • The J. Money Fund — a charity I’ll one day finally create again!!! ;) It’s been almost 10 years since our first one: Love Drop! (Anyone still around from those days?)
  10. Treat Yo’Self – Buy Something Fun – The only place where I’ll keep this on the list since I know most of us actually have the *opposite problem* here of wanting to hoard all our money! Haha…  So if you haven’t done something nice for yourself lately, go ahead and splurge a little and then get right back to the Goodness again to keep your sanity ;)

And btw – this doesn’t have to be a “one thing” only type deal either. Mix and match it up depending on your personal preference! For some that’s going “all in” on one main goal and killing it, while others like to spread out the love and hit upon a few different areas that excite them…

What matters most is that you’re using this money MINDFULLY, which I find is a lot easier to do when you get big chunks of it vs smaller ones throughout the year that tend to get lost in the shuffle.

So if you’re one to be getting a nice refund back this year, embrace it! There’s nothing wrong with it no matter what people say… It’s mostly us $$$ nerds that raise a big stink about it, haha….

Now make me jealous and tell me everything you’re gonna do with your money!! And bonus points for sharing *how much” you’re getting back to really rub it in! ;)

free money gif

Jay loves talking about money, collecting coins, blasting hip-hop, and hanging out with his three beautiful boys. You can check out all of his online projects at jmoney.biz. Thanks for reading the blog!

{ 87 comments… read them below or add one }

1 3P March 14, 2019 at 5:09 am

That’s a great list!
I spent mine on a combination of a few of those on that list. Bought a new couch and dinner table (Wifey made me). Then paid off a little debt while putting the rest in the savings. A little boring but at least I get to sit more comfortably now.

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2 J. Money March 14, 2019 at 7:18 am

And your wife is happy :)

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3 Dee March 14, 2019 at 5:46 am

I’m using mine as a start for a trip to the UK. It’s something I’ve wanted to do for so long and it’s gonna be that much greater when the entire trip is paid for outright. Woohoo! No debt for this lady!

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4 J. Money March 14, 2019 at 7:19 am

Totally!!! You’re gonna have such a fun adventure on your hands soon – I’m excited for you!

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5 Jeannine March 14, 2019 at 6:15 am

1. Pay life isurance premiums for the year
2. Renew family museum memberships
3. Pay for son’s sports fees (currently swim lessons) for the year. Pay 1 off or towards 1 credit card. Pad savings or a bill that gives us a. Teaching month
This has been the tax refund layout for the past 4years

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6 J. Money March 14, 2019 at 7:20 am

Love that museum idea!!

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7 whiskey March 14, 2019 at 6:22 am

Hah, trick question/statement. If you set your taxes up correctly you will either break even or get very little back. I hear people all the time getting thousands back. Screw that, “I want my money and I want it now!”
If memory serves, I haven’t gotten back more than 200 bucks in the last 10-12 years. I screwed up and had to pay in about 500 one year.
So what’d I do with this years paltry sum? Got a tank of gas to take me and the missus to dinner.

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8 J. Money March 14, 2019 at 7:21 am

I have a feeling a lot of people would agree with you here, but I very much enjoy getting my “free chunk” every year ;) (except for this one of course, womp womp…)

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9 Robin March 14, 2019 at 6:53 am

Haven’t filed my taxes yet – actually delaying it. Last year was the tax year from hell. Hoping to break even. If I get anything back will use to pay down debt. Hoping this year I’ve figured out how much to have taken out of my annuity to break even.

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10 J. Money March 14, 2019 at 9:58 am

Ugh – that does not sound fun, I’m sorry.

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11 Debbie March 14, 2019 at 7:00 am

Finally bought a bookcase to house books stored in boxes 4 years since moving. The rest went towards huge medical bills for hubby’s double knee replacement surgery in Feb. Poof all gone! I know. I know. Boring stuff!

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12 J. Money March 14, 2019 at 7:22 am

The bookcase isn’t boring!! Even if you don’t ever read them, books make a house SO COZY!!

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13 Aaron March 14, 2019 at 7:12 am

The credit union that I work for is offering a CD special for tax refund money. The CD is up to $3,000 for 12 months at 3.34% so at the end of the 12 months they will have earned $100. It is called the “Don’t Blow It” Special.

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14 J. Money March 14, 2019 at 7:23 am

YES!!!!!! Credit Union of The Year right there!!! Hahaaha…..

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15 haley March 14, 2019 at 7:46 am

I got back a total refund of $15. it sounds lame but i was excited because last year I owed $1200. I have a side hustle that makes it hard to plan exact numbers!

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16 J. Money March 14, 2019 at 9:59 am

Haha that IS good news!!! Much better to get a surprise in the *positive* area than the negative one! Celebrate with a nice fancy coffee from Starbucks ;)

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17 Michelle March 14, 2019 at 7:53 am

I always feel a little guilty about getting a big refund because, as Whiskey pointed out, it’s basically just letting the government hold my money for a year, but I put my refund into my kid’s college fund each year. I’m pretty confident that I wouldn’t max out my annual contributions without that chunk so knowing that assuages the guilt.

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18 J. Money March 14, 2019 at 10:04 am

Don’t feel guilty!!! You’re using that money wisely instead of frittering it away as most people do! And if you don’t trust yourself to do it throughout the year, then don’t! Your system is working just fine :)

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19 Missy March 14, 2019 at 8:04 am

This year we made a monthly budgeting buffer and the rest went into savings.

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20 J. Money March 14, 2019 at 10:04 am

Just what a $$ nerd likes to hear!

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21 Mr. r2e March 14, 2019 at 8:06 am

We are doing nothing! My goal every year is to NOT have a refund (or payment). A refund is an interest free loan you are giving to the government.

Statistics show that the majority of people (maybe those NOT reading your blog), blow their refund money on materialistic things and thus it goes right out the door and not towards FI.

I am probably going against the grain on this one.

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22 Megan Troyer March 14, 2019 at 9:47 am

Mr. r2e:
I couldn’t agree more. Why on earth would ANYONE want to give an interest-free loan to Uncle Sam when most are PAYING interest for: mortgages, student loans, car loans, or credit cards? Even if you don’t OWE any money to any bank, you could be earning interest or investing this money!
My 2cents.

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23 J. Money March 14, 2019 at 10:13 am

The big caveat here is *if* they use all that extra money every paycheck towards their financial goals – which we all know has a slim-to-none chance of happening ;) But at least by “giving the gov’t a loan” they see a nice chunk at the end and it just may shock them enough to *stop and think* first before frittering it away! Obviously if you’re good with money then it’s best to maximize it with every paycheck…

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24 Sarah March 14, 2019 at 12:39 pm

I agree. I plan so that I pay in way too much and get a nice refund. It’s helpful to me to be able to look at $2000+ dollars and make intentional decisions about it rather than an extra <$100 in each paycheck that would probably get eaten (literally) without noticing.

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25 Financially Fit Mom March 14, 2019 at 8:17 am

I used mine to help pay down our country’s debt. Wait…..that’s not a refund? And my “contribution” won’t pay down the debt? WHAT?! All these years of trying to help out our country get out of debt and it’s not working, I can’t believe it! Ok, just kidding, but no….no refund here either. But I did get a pretty sweet $10K+ bonus at work. After I contributed my part toward paying down our country’s debt, I maxed out my own IRA and dumped whatever was left into my taxable investment. Hels yeah – this girl knows how to party.

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26 J. Money March 14, 2019 at 10:14 am

Haha… you win my Favorite Person of The Day award – congrats ;)

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27 Katie March 14, 2019 at 8:19 am

I usually get just a small chunk back each year, which I think is perfect – don’t want to give the govt a loan but also I really don’t want to owe either! This year I got about $1700 back and I’m using it for a trip to Alaska with my family! I could have saved/budgeted responsibly for the trip but this seems more fun…almost like free money! (I know, I know, it was my money to begin with, but still!)

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28 J. Money March 14, 2019 at 10:15 am

Hey – you know I’m with you on that!!

And good point about *not owing* too – forgot to include that in my analysis as that alone is enough to want to loan the gov’t money :)

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29 Paul March 14, 2019 at 8:21 am

No refund for me… I mean I suppose that means I maximized my take home but it feels like a loss still… Overall I owed $200.

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30 J. Money March 14, 2019 at 10:22 am

Haha yup – always feels better to get a positive surprise than a negative one :)

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31 Chris March 14, 2019 at 8:23 am

I don’t want to get a big refund and I don’t want to owe a lot, so we try to make it about even, but last year my husband contributed a MAJOR amount to his 401K, so I think we may be getting a refund. Not sure yet. It looks like I also didn’t have too much taken out of my check, so it will be a mystery. lol

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32 J. Money March 14, 2019 at 10:15 am

I hope your mystery ends in the positive territory than the negative one :)

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33 Money Beagle March 14, 2019 at 8:35 am

Nothing exciting here. Anything that’s not going toward savings is going to pay off some traveling that we like to do as a family.

My number of deductions on my form at work doesn’t include my kids. This has always meant we get a refund, and it also meant that we didn’t get zapped by the changes in the tax codes as many did.

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34 J. Money March 14, 2019 at 10:16 am

Ahh yess…. those tax changes did a number on a lot of people I heard :(

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35 Nate March 14, 2019 at 9:19 am

I put $1000 into my Roth IRA, bumped up my emergency fund by $500 and split the rest between home, auto, and vacation savings. Didn’t spend a penny of it. Kind of boring I guess.

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36 J. Money March 14, 2019 at 10:17 am

At least buy yourself a coffee or something! ;)

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37 Joe March 14, 2019 at 9:52 am

Hey J, great article! I just went through this dilemma the other day. I got a $6,000 return. I really wanted a motorcycle I found on Craigslist for $2,900. My girlfriend was no help as she was all like “You deserve it!! You should do it etc…” In the end, I fought it off and did the responsible thing and put it toward one of my rental property mortgages. Not as “sexy” as a bike, but oh well LOL!!

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38 Joe March 14, 2019 at 9:56 am

I should mention in case anyone says anything…the reason for the large return is not that I pay too much in each year from my job, but rather I write off rental real estate losses :-)

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39 J. Money March 14, 2019 at 10:19 am

Heyo!!!

Although I was hoping you were going to say you got that bike and did a 50/50 scenario ;) I’m secretly desiring one out of the blue myself and was going to use your answer to help solidify mine more, haha… So your girlfriend messed up my dreams too!

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40 Joe March 14, 2019 at 11:12 am

Haha!! Well, I did promise myself that once I hit this next financial goal I would “spurge” on something. You could always set a small goal that you can accomplish in like a week and then get that bike lol!!! Love the site…keep up the great work ;-)

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41 J. Money March 14, 2019 at 11:15 am

I am here for your enjoyment!

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42 Revanche @ A Gai Shan Life March 14, 2019 at 10:03 am

I’m slightly terrified that we’re going to owe 5 figures this year with all the changes in tax code and how many deductions we’re losing. Pray for us!

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43 J. Money March 14, 2019 at 10:19 am

I will!!! That will be horrible if that’s the case! :(

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44 Joe March 14, 2019 at 10:03 am

What tax refund? We’ll owe around $5,000 this year.
Bah!

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45 J. Money March 14, 2019 at 10:20 am

Ouch! How did that happen? Something with blog income?

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46 Working Mom March 14, 2019 at 10:09 am

Surprised with a $2200 refund this year (we actually had enough itemized deductions to take more than the standard deduction) and I have a 1099/lots of interest-earning accounts that make it hard to predict. We are using it to pay our Emergency fund back for a minivan we bought a few months ago ahead of when were planning to replace our 2006 van which needed major repairs.

One fun thing is that I used last year’s $1200 refund to start a “15th anniversary” trip fund and we’re taking that trip next month! Nothing like using 2017’s money to pay for a trip in 2019!

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47 J. Money March 14, 2019 at 10:20 am

Haha there you go!! Enjoy that vacay!! :)

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48 David March 14, 2019 at 10:42 am

With low income and 3 kids, Uncle Sam is very good to us and was even better to us this year with the new tax law! $2810 paid the last of the roof debt (ugh, house maintenance!!), $3500 to try to jumpstart emergency savings account, and $50 each to my wife and I!

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49 J. Money March 14, 2019 at 11:14 am

An excellent diverting of the money – well done :)

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50 Liberty @ Love Liberty Shelter March 14, 2019 at 11:32 am

$4500 toward emergency fund, $5000 toward highest interest student loan.

How in the world did we get so much back?! I have a feeling it’s being a one-income, six person family, earning $37k last year (still, the very best year we’ve ever had, and we still paid down $13k of debt and bought a new car for cash as well).

This year, with a significant raise, we’re projected to more than double our income, propelling up two tax brackets (whoa!).

So now we have the interesting issue of whether to max out our 401k or funnel all that money into saving for a house. A good problem to have, for sure!

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51 J. Money March 14, 2019 at 2:45 pm

So much fascination in this comment!!! Huge refunds, huge income projections, huge finance moves – just all around huge! Haha… Sound exciting :)

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52 Sarah March 14, 2019 at 12:34 pm

I withhold at a ridiculous rate. I have one dependent, but withhold as if I don’t. I file head-of-household, but withhold as “single”. I have some 1099 income, so I take out an extra $50 from every W-2 paycheck. With all this, I got back about $5000. I am:
– making double-payments on most of my debt this month
– getting to a “money age” of 30+ days buy budgeting now for ALL of my April bills now (my finances are a wreck post-divorce)
– buying myself a small Smart TV (I haven’t owned a TV in 3+ years)
– bumping up my Emergency Fund by about $500
– taking my son to visit a dear friend this summer

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53 J. Money March 14, 2019 at 2:46 pm

A plethora of goodness there – J$ approves :)

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54 Chadnudj March 14, 2019 at 1:00 pm

Moved back in November to a house in the burbs, which means we now have a yard and lots more space (great for kids and the dog, plus we have better public schools)…..so our refund is being used for a riding lawn mower and some furniture.

We’ve been pretty smart generally about investing/paying down debt (but not perhaps as hardcore as the FIRE folks and readers here — still have plenty of debts to address in the future), so I’m okay spending this one given where we are in our lives right now (two kids in daycare, new house, etc.). So long as we start ramping up the savings/debt pay down in the future (which we will!), we’ll be fine.

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55 J. Money March 14, 2019 at 2:48 pm

And soon your kids will be out of daycare and into school too!! Saving you (probably) thousands a month to help speed up those debt payments! :) We’re at about $1,000’ish/mo now with 3 kids compared to over $2,400/mo just two years ago with only 2 kids! It gets better!

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56 Brian March 14, 2019 at 1:51 pm

First is a new couch. Old one is falling apart and starting to get pokey in the wrong spots (not sure what the right spots would be). Then put some into the kids 529s (which will get me money back next year too!).

The remaining will go into the vacation fund for our trip to Italy next February. I promised my wife we would take an overseas vacation every anniversary. Since we got married on leap day, it gives me 4 years to save for each trip.

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57 J. Money March 14, 2019 at 2:49 pm

Hahaha… I’m sure she just loves how clever you are ;)

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58 Megan March 14, 2019 at 3:32 pm

We pulled some funds from our emergency fund in December to pay off the personal loan I took out at the beginning of last year to consolidate credit card debt. Even at the lower interest rate, it was still almost 11% and we decided it would be better to just knock it out. Thanks to our moderate tax refund, we almost have the emergency fund back to where it was.

This will allow us to start making extra student loan payments this month.

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59 J. Money March 14, 2019 at 5:54 pm

Excellent plan. 11% is no joke!!

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60 Avicado March 14, 2019 at 6:20 pm

We aim never to get tax refunds, but sometimes it happens. We don’t ever spend it as though it isn’t really earned income but some kind of free bonus. Therefore, we do with it what we do with the all of our income – gladly have it and put it in the bank. Leave it there apart from the cost of living, savings and retirement.

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61 J. Money March 15, 2019 at 7:08 am

You respect your money well :)

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62 Nina March 14, 2019 at 7:38 pm

We got a HUGE tax return this year (due to the two of us changing jobs midway through the year) so we put a huge chunk of it towards student loans and then we still each out $500 to spend on whatever we wanted. Right now, I still have $150 burning a hole in my pocket (I bought a kindle and some random stuff), trying to decide what to spend it on…….

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63 J. Money March 15, 2019 at 7:09 am

That’s fun!!

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64 Martinus March 14, 2019 at 8:21 pm

I was thinking about spending my refund on booze and cocaine. Then I plan to waste what’s left over.

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65 J. Money March 15, 2019 at 7:09 am

Yeah yeah, haha…

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66 Gene Roberts March 14, 2019 at 10:26 pm

Trick Question!

Money “Bosses” don’t make interest-free loans to the guv’mnt. :)

I’ll be coughing up a little over a grand in a couple of weeks.

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67 J. Money March 15, 2019 at 7:10 am

No thanks!

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68 NikkiD March 15, 2019 at 1:23 am

I’m putting my refund (about $900) toward my moving fund. I’ve been staying with family but have a new job (pays 95% more!) and need to move a few cities over. With the refund I should be able to up my fund to enough to cover the deposit and general moving costs.

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69 J. Money March 15, 2019 at 7:11 am

95% more – wow! Good for you!!

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70 NikkiD March 16, 2019 at 1:47 am

Thanks! I’m still dumbfounded. I wasn’t getting paid very much before so now I’m at what’s probably a regular income to most folks, but I’m thrilled! Plus now I can put real money away for retirement!

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71 J. Money March 18, 2019 at 4:36 pm

Yeah you can!! Make a plan for it all so you don’t slip into lifestyle inflation!! :)

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72 Nita March 15, 2019 at 5:08 am

It’s amazing for me to hear about such big tax refunds…
It’s not tax season here (that’s April-May), but if I estimated correctly I should be getting back about €100.
I’ll just cast it in the e-fund, it’s too thin to my taste.

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73 Eli March 15, 2019 at 10:57 am

This year is the first I haven’t given the government an interest-free loan! We didn’t get a refund because I accidentally put my deductions too high. Sadly, that also means we owe the Feds a (low) 5-figure bill. On the plus side, it’s low enough and there were enough tax-bill changes that I won’t get penalties when I pay it in April.

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74 J. Money March 15, 2019 at 3:06 pm

Well that’s something!

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75 Hscarlatelli March 15, 2019 at 12:31 pm

Every penny went right to savings. $2,0000

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76 J. Money March 15, 2019 at 3:06 pm

My type of lady.

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77 Mora March 16, 2019 at 7:25 am

Will prob put about 2,000 towards student loans, 1,000 towards new windows and the rest to savings. We have baby number two coming on June I want to up the savings and I’ve been working really hard to pay down student loans. Since last August I’ve been making weekly deductions from my checking to savings tonstart simulating a second daycare fee. I started with 60 a week and now we are up to 185-all this “extra” money has gone to pay down he student loan! We should have it paid down to zero in approx 15 months so I’m very excited!!!

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78 J. Money March 18, 2019 at 4:38 pm

Very exciting indeed!!! Gonna free up SO MUCH money once that’s done!! Just in time for the baby to eat it back up! Haha… (but my Lord are those cuties worth it..)

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79 Laura March 17, 2019 at 2:25 am

We were just so happy to GET a refund; last year we owed thousands of dollars and had adjusted our withholding massively to account for that.

We are using our refund as a temporary emergency fund—our rental property is being sold, so we will use it to cover the mortgage during the time we don’t have tenants but before the sale. I just hope it’s enough and that the house sells before it runs out.

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80 J. Money March 18, 2019 at 4:39 pm

I hope so too!!! Will be thinking good thoughts for y’all!

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81 Mads March 17, 2019 at 2:59 pm

I’m really a guy, who loves to save – but to be honest, number 10 is also a pretty good one :)

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82 J. Money March 18, 2019 at 4:39 pm

Good to do every now and then and remember what money is for ;)

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83 Steve o March 17, 2019 at 4:31 pm

I owe 3,000 so nothing to plan here

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84 J. Money March 18, 2019 at 4:40 pm

Dang… was it by design or a surprise?

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85 Steve o March 18, 2019 at 7:36 pm

It was a surprise

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86 SL March 18, 2019 at 1:54 pm

I am getting closer to my plan of nothing owed nothing returned. Last year was several thousand received (darn those moves and new accountant — he found mistakes on previous returns and I got more back) and this year I am getting about 400? I am very happy with that.

Y’all do you and enjoy getting closer to FIRE!

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87 J. Money March 18, 2019 at 4:41 pm

You too, friend!!

And always better to get a nice surprise than a nasty one! ;)

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