2016 is FINALLY over. Thank goodness, right? If you’re like me, you were hit with some pretty heavy things this year. I especially was affected by The Great Flood of 2016. Thinking of the promise of a new year reminds me of the possible tax refund coming my way in February and what it can do for my current financial situation.
By now many of us that were affected by disaster (natural or otherwise this year) are in recovery and rebuilding mode—not just our homes, but our lives in general. It’s important to plan for what’s to come in 2017 and beyond. Here’s to hoping it’s good for all of us! I plan on following the Shrink, Spend, Save plan to help meet my financial goals in 2017 and get ahead of any unexpected expenses that may come my way.
SHRINK – Debt is sometimes inevitable, but it’s important to pay off unnecessary high interest debt in a timely manner. Use 1/3 of your tax refund this year to pay down credit cards or other high interest loans. Get the ball rolling with these funds and as you pay off one bill, move those payments to the next working the debt snowball method. You’ll see results quickly and be encouraged to pay down even more!
The chart below helps illustrate the debt snowball method and how moving your payments from one debt to the next as you pay them off will allow you to pay it all off more quickly. It’s important to remember that you’ve been living with those overall expenses since the beginning, so this won’t affect your monthly budget!
|Account 1||Account 2||Account 3|
SPEND – We all work hard for what we have, and some of us are trying to replace things we recently lost. It’s important to spend a little on yourself, your home or your family. Make wise spending choices on things you need, but enjoy the fact that you have the funds to purchase an item or items out right and not finance them. Spending is just as important as paying off debt, just spend wisely and locally if you can.
This part of your return is a way to treat yourself for making smart financial decisions! You can purchase that new TV that you wanted, especially if you lost yours and need a new one. You can also make purchases that are more of a need like a new washer or dryer if yours it’s on its last leg or might just need some minor repairs to get it back to running condition.
Don’t forget things like having your AC serviced too. It’s almost spring, which means it’s a good time to call the air conditioning repair company and have it cleaned and serviced. This helps avoid more expensive repairs in the future. Again, the main goal here is to spend your money wisely on things you need or want with this portion of your refund.
SAVE– Use the final 1/3 of your tax refund to start or increase your emergency savings for 2017. By having just $500 in savings, you can avoid getting loans for things like new tires, A/C repair, car repairs and so much more. Remember your goal should be to save up 3-6 months of expenses over the course of 2017 and using 1/3 of your tax refund can be a great start.
The most important thing you can do in 2017 is be prepared for the unexpected. Start paying down debt to put yourself in a better financial position and improve your credit score. Spend a little of your hard earned money on yourself and your family. Lastly SAVE, SAVE, SAVE. Save for the rainy day (or several that hopefully will not evolve into flood) that merely requires a little bridge over troubled waters.
Get ready to have the best year ever by getting your finances on track. Contact one of Pelican’s Nationally Certified Credit Counselors** today to make an appointment and let us help you make the most of your tax refund!
*Pelican State CU membership required. IRA = Individual Retirement Account. The information provided is for informational purposes only and should not be considered tax advice. Pelican State CU is not liable for decisions made by the member based on the information displayed on this page. Because every member’s tax situation varies upon multiple factors, please consult your tax adviser regarding your own eligibility and the amount you may contribute to an IRA.
**Pelican State CU membership required to take advantage of free credit counseling services. Visit pelicanstatecu.com/join to become a member. You have the right to a free credit report from AnnualCreditReport.com or 877-322-8228, the ONLY authorized source under federal law. Credit counseling is not intended to give you financial advice, but the financial education you need to make informed decisions. Results may vary. Pelican and its employees are not responsible for any claim, suit, action or damage resulting from credit counseling.