I got my Federal tax refund today! I just wrote about how excited I was to be getting it and it’s finally here. And now that it’s sitting in my bank account, I finally feel like I can talk about it. For some reason, I feel like talking about it before hand will jinx it and it’ll turn out that I made a whole bunch of mistakes and now I owe penalties and fees and…well you get it.
So here it is.
My Federal tax refund was $6,374. It’s definitely a large amount – and I have about half of that expected from State in the future. I have been getting large refunds since I started working and I just assumed it was because I paid a lot in taxes. While that idea is correct, it wasn’t until I started reading personal finance blogs that I realized I should be increasing my allowances so I get more every paycheck instead of giving the government an interest-free loan.
Last week, I increased my allowances for both Federal and State so we’ll see what that equals to in terms of dollars on Friday’s paycheck. In the meantime, here’s what I decided to do with this portion of my refund.
$100 – Roth IRA fund. It’s not much but like I mentioned, I’m just trying to build this up slowly.
$274 – Shopping fund. I don’t have a specific “shopping” savings account so I put this into my snowboarding fund since that’s the closest thing I have to a fun-fund. I haven’t been clothes shopping in awhile and I really need new jeans and new workout clothes so that’s what this money will be going towards.
$6000 – Emergency fund. There’s the majority of it! Thanks again to all the PF bloggers that drilled the point home that an emergency fund is really important. As you can see, I currently only have $744 in there so this will really help me to feel more secure. I plan on putting the majority of my state refund in here as well.
In a matter of minutes, before the bank was even done processing the refund, I had “spent” it. I’m happy though because I spent it all in my savings and to me, that is a great feeling.
If you got one, have you spent your refund yet? If you didn’t get a refund, what would you have done if you had?
Emily @ evolvingPF says:
I love the screenshots! And I love that you have essentially saved your entire tax refund, even if some of it is saving-to-spend. That is not at all the same as blowing it as they money is not burning a hole in your pocket and you can make a nice, considered purchase.
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YPFinances says:
Thanks! The money is slightly still burning a hole in my pocket but as long as I know I can spend it in the future, I feel better about that.
LifeInTransition says:
I got a $100 back for my federal tax refund, but I used it all towards the taxes I owed to the state government (I owed $164, so not too much).
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YPFinances says:
At least that cut down the amount you owed the government! Getting something back is better than owing for both.
From Shopping to Saving says:
Yup, I got a refund of $600
But I put it ALL into savings. I’m not too interesting haha
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YPFinances says:
I think that’s really interesting! I honestly don’t understand people are the ones who blow it on stuff and then complain that they don’t have any savings or can’t make payments on debt.
From Shopping to Saving says:
OMG…my best friend…I know I already told you on twitter and I always put her on blast on my blog but I just get sooooo CRAZY when she complains and complains about not having enough money. But yet they have purchased a $1300 TV (why couldn’t they have gotten a $500 one?!).. oh also they already have a 42″ flat screen LCD. She bought a $400 purse and she didnt take my advice on using coupons. Her husband bought a workout bench, she bought the naked 2 palette (and she already has the 1st one), and they bought the iPad 3… ALL WITHIN THE PAST 2 WEEKS. Yeah and she complains about not having enough money. It drives me up the wall. She then said that she needed to save money to buy a place. She lives in the bay area and prices there are expensive! So I told her – look, you’ll have to save at least $40,000 to put 20% on a down payment if you want your interest rate to be lower and monthly payment to be manageable. And you will have to start small. She then got mad at me and said “I have a family to support. I am NOT staying in an apartment.” I really was speechless. It’s crazy how we’re best friends but we are on 2 diff pages…so I am SO thankful for my PF blogging buddies that understand me.
Sorry…this should probably have been in an email to you
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From Shopping to Saving says:
I forgot to mention they have a 10-month-old baby and they pay so much for daycare, and they already have an ipad. What is up with the lifestyle inflation!?
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Cassie says:
It will be going in its entirety to paying off debt. If anything is left over, it’ll go towards getting my emergency fund going. If I meet the minimum balance I want to obtain on that, then I’ll do a little shopping. In all reality it just depends on when I receive it next month. Nicely done on building an instant emergency fund with yours!
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Invest It Wisely says:
That is a sweet refund… congrats! With my new adventure I am actually quite bewildered on how my actual tax situation will end up. I’m not paying any taxes since no withholdings, but the final result will depend on what credits etc… I get to claim.
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WorkSaveLive says:
We didn’t get nearly as much ($3500) gut $2000 of it when to our car-fund savings account, the remainder went to giving, spending (KU season football tickets), and some went to buy a new bed for our dog.
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MyMoneyDesign says:
HOLY COW – That is a huge refund! Do you have 18 dependents???
Mine was much less – $3000 range. It will go towards some home improvement projects we have lined up for the Spring and Summer. The Emergency Fund was a great move. It’s really hard to be that disciplined and do the right thing.
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GB @ In Budgets We Trust says:
Sweet refund!!! I like you spent it all in “Pay Yourself First” style
It’s a good thing you changed your allowances, so you can see more of it in your paycheck. You may want to consider increasing your retirement 401(K) contributions or automatic transfers to savings so you don’t really “see” the extra money coming in. It’s a little trick that works pretty well!
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GB @ In Budgets We Trust says:
I meant, “I like how you spent it” in my first sentence. haha, sorry about the typo
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Jen @ Master the Art of Saving says:
Wow, that’s a hefty tax refund there; just about twice what we got back. You made some awesome choices on how you spent it—huge props.
I too wrote a post about what we did with ours, I created a RISE plan. Long story short, we replaced, invested, saved and experimented.
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Curiosity Killed the Blog says:
Congratulations on an awesome choice! I don’t know that I could have showed that much restraint. I bet it feels awesome to have such an ample emergency fund, just in case the worst happens!
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Carrie Smith says:
Doesn’t it feel so nice to have a full emergency fund in place? To me it’s like a weight is lifted off my shoulders and I have more freedom to do things in life. I think you “spent” your refund very smartly. And I’m glad to hear you decided to take a look at your allowances, that’s always a good idea. However, I am among the minority of PF bloggers that would rather have a refund than owe a balance. But that’s just me.
I spent my refund basically the same way you did. Instead of putting any money towards an e-fund, I put the biggest chunk towards my car loan. Then 1/4 into my Roth IRA and 1/4 for spending money.
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