In my last post, I described my lower middle-class upbringing. I mentioned that my parents were terrible with saving money, and that we weren’t really taught to save either. That isn’t entirely true. We did have one person that tried to help us save money. Unfortunately, it didn’t work out the way she wanted it to. 

Grandma’s Help

We got a small bit of help in learning to save from our Grandmother on our mom’s side. When we were born, she convinced my parents to open a savings account for us. She gave us a check on every birthday and Christmas with “for deposit only” written on it, so we would be forced to deposit it into our savings accounts. We had the option to deposit the rest of our birthday money as well, but we rarely did.

My grandma didn’t have a lot of money, so she was only able to give us each $25 on special occasions. Over time, that does add up, and by the time I started working for my parents, I had about $800 saved up. That’s a lot for a fifteen-year-old!

I Learned about taxes the hard way

Unfortunately, the savings account didn’t work out the way my Grandmother intended. You see, when my parents started paying us for delivering papers, they set us up as independent contractors rather than wage employees. That meant that no taxes would be taken out of our paychecks. We didn’t make a lot of money, but as we all know, that doesn’t matter. The IRS still needs to get their share.

When tax season rolled around that first year, my father did our taxes for us. We each ended up owing the man around $700. My parents took us to the bank and drained our savings accounts so we could pay our taxes. They said we should have known better. We should have been putting money aside each pay check to pay. How we were supposed to know the subtleties of the complicated tax code at age 15, I’ll never know!


Making it worse

Unfortunately, I didn’t learn my lesson. I continued working for my parents as an independent contractor, and continued spending all of each pay check. When tax season rolled around, I just ignored it. I did the same thing the following year. Eventually, I stopped working for my parents and got a normal part time job. Unfortunately, by this time, I already owed the IRS almost two thousand dollars. Even worse, my father accidentally switched mine and my brother’s social security numbers on our tax returns, so we didn’t even know who owed what!

Digging out of the hole

I was a senior in high school when I realized how big my problem with the IRS was. That’s when I decided to take steps to dig my way out. Surprisingly, it was super easy to get the mess with the social security numbers straightened out. But what was even more shocking was that they were really nice about helping me set up a payment plan and get the tax debt straightened out. They are super willing to work with people who are trying to do the right thing!  It took me about a year to fully pay off my debt to the IRS, but it felt good to make that last payment.


Lessons learned

Learning about taxes the hard way had some advantages. I learned to always think about how taxes will work with any job, so I don’t get surprised with a giant bill at the end of the year. I also learned that the IRS isn’t as terrible as everyone thinks they are. One of the reasons I waited so long to call and get it taken care of is that I was terrified of calling them!  All I ever heard was horror stories about going to jail for tax fraud and IRS agents being super rude to people. Maybe it was my age that helped, or maybe it was the fact that I was actually trying, but every time I called, the agent was super nice and helpful. I never had a bad experience.

One final thing I learned is to always check over all the important forms.  One little mistake can cause huge complications down the road (on the plus side, I still have my brother’s SSN memorized, because I thought it was mine for so long…devious, I know!).

What lessons did you learn the hard way?  I’d love to hear your stories!

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"Spend your tax refund on assets to achieve financial freedom"

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What?  A personal finance blogger is telling me to spend money?  What backwards world did I just step into?  Don’t fret yet! Yes, I am giving you ideas of the best things to spend your tax refund on, but (most of) these options are financially friendly!

Best Things to Spend Your Tax Refund On


The best thing you can spend your tax refund on is debt if you have it (and I don’t mean getting shiny new debt!). Put that few hundred extra dollars towards a credit card bill, student loan, or even car payment! It will make you feel good about yourself and push you a little further down the road to freedom!


Emergency Fund

Do you have money squirreled away for a rainy day? If not, you can use that nice chunk of change that you get from Uncle Sam to start saving!  Experts agree that you should have three to six months of living expenses saved up in case of an emergency. Getting a tax refund is a great opportunity to either start an emergency fund or shore up the one that you already have.  


Yeah, my personal finance blogger friends are going to hate me for this one. But I’m a firm believer that you only live once, and you have to enjoy the time you have. So if you don’t have a lot of debt and have your emergency fund topped off, treat yourself!  Take that trip!  Money spent on experiences is always better than money spent on stuff.


Another awesome thing to spend your tax refund on is something that makes you even more money!  That’s right, I’m talking assets and investments!   My favorite investment for beginners is Vanguard’s total market fund, but there are plenty of options. They key here is to buy an asset, not a liability. That shiny new car is not an asset!!

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I get it, sometimes stuff happens and we need to spend some of our tax refund money on fixing that stuff. If your house needs a new roof, or you need a new appliance, now is a good time to get it. You won’t have to budget the money out of your paychecks and the tax refund can kinda feel like free money. But don’t go buying these things just because you can. If your old dryer works great, there’s no reason to upgrade. Be smart about it. These things aren’t assets, so only buy them if you absolutely need them.

Something fun!

Yep, my PF blogger friends are totally going to crucify me!  But what’s the point of having a little extra cash if you can’t spend it on something cool for yourself?  Now I’m definitely not advocating spending all of your tax refund on something fun, but I do recommend taking about 10% of it and blowing it on something that you will enjoy. That might be a nice dinner out, or some new shoes, or even a mini-shopping spree. Giving yourself this little treat will help you feel like all the rest of the stuff is more worthwhile, and it will give you extra motivation to keep up the good spending habits. Think of it as a reward for being smart with the rest of your money!

Related: 6 Reasons why I love getting a tax refund

What am I going to do with my tax refund?

I like to spread my money out a little bit, so I’m going to use a lot of these ideas for this year’s tax return. First, I’m going to top off my short- term emergencies saving account (yes, I have two savings accounts, one for long term emergencies and one for short term emergencies). Next, I’m going to add a few hundred bucks to my Vanguard account. After spending the majority of my return on savings and investments (gotta take care of future Melanie firs!), I’m going to have some fun with the leftovers. I’m going to add a little bit of extra cash to my Egyptian vacation fund, and I’m going to take about a hundred dollars and buy some new clothes.


What are you going to do with your refund? Let us know in the comments!

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I love getting a tax refund

Hey folks! Transparency Disclosure- Some of the links in this article are affiliate links. That means I’ll receive a small commission if you decide to click on it and buy something. Don’t worry, it doesn’t cost you anything extra!

Most finance bloggers will tell you that getting a tax refund is actually a bad thing. Why give the government a free loan?  These finance bloggers make an excellent point. If you really think about it, the money you are receiving from your refund really is money that the government “borrowed” from you throughout the year, without paying you interest! Maybe that’s one of the reasons why they insist on making taxes so complicated. But I digress.  Still, in spite of logic telling me it’s a bad idea, I love getting a tax refund. Here’s why:

1. It’s usually pretty hefty

Because I own a home, I have access to some pretty awesome tax deductions. I can deduct the interest I pay on my mortgage and the taxes I pay on my property. Whoo-hoo!  These two deductions usually push my refund up into the 2-3 grand territory, which is pretty awesome. And last year (when it was still tax deductible, did the new tax bill take that away?) I moved 2000 miles for a job!  So I’m thinking I’ll get a pretty nice return this year.

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2. I feel good about getting a large sum

The thing about getting a pretty nice return is that it’s actually pretty nice. It is freaking awesome to get a hefty lump sum deposited into your bank. I know this isn’t logical or practical in any way, but sometimes we can let our emotions win. Getting a random check for 2-3 thousand dollars feels pretty dang good. It definitely feels better than getting that same 2-3 grand over the course of an entire year!

3. It’s easier to budget

Not only does getting a large sum feel better, but (for me anyway) it’s so much easier to use a large sum like this for investing and special treats than it is to use your regular paycheck. I’m good enough at budgeting, but I’m not spectacular. That 2000 spread out over 26 paychecks is only 76 bucks a paycheck. Now you super frugal awesome money managers may be able to easily calculate that and squirrel it away, but 76 bucks isn’t much to me. It would be gone. I’d use some of it to reload my Starbucks card, or some of it to order a pizza (if you can’t tell, I’m very food motivated). I definitely wouldn’t save up $500 from that to buy new clothes (yes, I usually go clothing shopping once a year, and use my tax refund to do it). I may or may not put some of it into an investment or savings account, but why leave that to chance?  It’s way easier for me to manage that extra money when I get it in a lump sum.



4. It helps me quickly achieve goals

This is another psychological rather than logical point but hey, we are all human, and we all have weird emotional things. It feels quicker to take $1000 from my tax refund and put it towards my vacation fund than to put $50 per paycheck in my vacation fund. I know, I could save for the entire year and by tax time I’d have the exact same amount, but it just doesn’t feel the same.

I think it’s important that we give ourselves psychological wins sometimes. Everything can’t always be about logic. I find that I actually do better with my overall investment strategy if I let myself have some of these.

5. I’d rather get a refund than owe money

Let’s be honest, the US tax system is complicated at best. There are so many different rules and income levels and percentages that it can be confusing to keep track. I wouldn’t want to calculate things incorrectly and then end up owing the government a huge amount (or anything at all, for that matter). I do know that with my income level and my typical deductions, I usually get a pretty decent refund. So why mess with that and risk owing money?

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6. I don’t want to do the maths (or research)

Not only do I not know how to calculate things out so that I’d be at a big fat 0 come tax season, but I don’t care to find out. I don’t want to do the math here. I don’t want to calculate how much money I should send to the tax man each paycheck, and I don’t want to figure out how much of my new, bigger paycheck is due to my tax changes.  And, tying into the reason above, the system is so freaking complicated that I don’t think I’d be able to figure it out even if I had the desire! Or maybe I don’t have the desire because of how complicated it is. Either way though, learning the ins and outs of the tax code and figuring out exact numbers isn’t something I’m interested in.

That’s why I love getting a tax refund

So there you have it. Six reasons why I, a logical personal finance/lifestyle blogger, actually prefer getting a tax refund. Do you like to get a tax refund or would you rather not give the government an interest free loan?  I want to know if I’m a huge outlier in the personal finance community!  Let me know in the comments!


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