Tax Day Comes #illumedati


Hey everyone, it’s Finance Fridays again. This is just a reminder that “Tax Day Comes”.

529s and the New Tax Law 2018
Stock Photo from: Pixabay

Tax Day Comes

If you haven’t already done your taxes, they’re due by April 15, 2019, unless you’ve filed an extension.

However, if you’ve already filed your taxes, like I did mine then you might have a few dollars extra sitting in your bank from a tax refund.

I’ve talked about getting a Tax Refund before. I’d recommend you revisit that post if you’re getting a refund and wondering what to do with it.

My general stance on things hasn’t really changed. In 2018, we used some of the tax refund and put it toward the California Family Trip. If you’re interested, you can read all about it – 1, 2, and 3.

However, for this year we aren’t planning any big trip. I think we may do a staycation or two, but there are currently no plans for Disneyland, Disney World, or any long plane flights anywhere.

So what is happening to my tax refund this year?

Well, I’ve told you about the need for some Home Improvement. However, I’ve already budgeted those projects into my annual estimations for what I need to save. Overall, I’m pretty conservative with how much money I need to keep around and I’ve talked before about decreasing my Emergency Fund. If you recall, when it comes to taxes, I’m usually prepared to either pay a little or expect a small refund.

This year, it’s a small refund even though our Hawaii State Income Tax increased. That said, I don’t really have any plans for it, it’s going into my default plan— which is to put it toward our student loans. In fact, this year marks the start of my plan to putting some serious money toward our student loans. It was sidetracked for a bit because of moving, changing jobs, rebuilding an emergency fund, building a down payment for a house, solar panels, and now some home improvement.

I see…

Don’t get me wrong, our loans are still being paid down on normal repayment plan. However, this will mark the first year where any “extra” money over a certain threshold will be thrown at our student loans, with the higher interest loans being paid off first. I am hopeful that I can pay off the remainder of our student loans in the next 5-7 years. My current tentative plan is for 2025, barring any unforeseen circumstances. This all still falls in line with my 20 Year Career plan.

I do want to clarify one thing though. When I say “remainder of our student loans”, I am actually excluding a portion of them. A minority of my wife’s student loans are at < 2% interest. As I’ve stated before, these are of considerably less importance to me. I honestly would not mind drawing them out on the current repayment plan. That said, there is something to be said for the psychological benefit of having “no more loans”, and my wife would really prefer we just paid them all off. It’s kind of a psychological barrier to her ever being able to go part-time.

However, I’ll cross the bridge when we come to it though. I would imagine by the time we get there there should be enough money to pay the rest of them off and put it behind us.

TL;DR

Tax Day Comes.

Don’t waste your refund.

I will be using mine on our student loans… and start putting serious effort into paying ours down over the next 5-7 years.

Finance Fridays Sensei

-Sensei

Agree? Disagree? Questions, Comments and Suggestions are welcome.

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