There may have been a time in our lives when a large tax return meant some new expensive toy for the family. We are no longer those people and have really changed how we look at our tax returns.
In 2010 we embarked on a new journey to become debt free after attending Dave Ramsey’s Financial Peace University class at our church. We are still working on that journey. The entire experience has been life changing for us. This experience changes how we look at our tax return. Most of our tax return is earmarked before we even receive it. We fully fund irregular expenses we know we will experience in the upcoming year.
I must admit: This practice would most likely not be endorsed by Dave Ramsey. He would like you to manage your money and not have the government hold onto it for you all year. For us, it works as it actually forces us to live beneath our means. It is a fool-proof way to save funds that we know we can’t touch until we file our taxes. If the government makes an extra 5 bucks in interest off of our withholding, then they can keep it and we’ll appreciate that this money was saved for us 
That being said, you can bet we file our taxes very early in the tax season. We file our taxes the first Saturday in February. Since we both claim “single-zero” on for payroll deductions our return is usually pretty big.
For 2014, the following will be fully funded from our tax return:
Debt Reduction – we will pay off our last credit card, if there is still a balance once we receive our tax return. (That card is down to about 1 and 1/2 payments til zeroed-out.)
Emergency Fund – will be fully funded at $2000.
Car Insurance – set aside enough funds to pay car insurance on all vehicles every 6 months to receive a discount.
Christmas – yes, we fully fund Christmas in February! What peace of mind! (Because you know Christmas is going to happen again this year.)
City of WBL – irregular bills are hard to budget for so we fully fund them from our tax return. This a quarterly bill that used-to sneak up on us at times….not anymore!!
Soccer Fees – our youngest plays traveling soccer
Camp – our youngest goes to camp each year.
Duct Cleaning – This year we are having the ducts in our home cleaned. Between illnesses and allergies, it seemed like a good thing to get done. This was last done in 2007.
Summer Fun – this is a new category we are funding this year. We found that small parties, mini-weekend-vacations and other fun events over the summer wreaked havoc on our budget. This year we set aside extra money to go to participate in summer fun!
Training – as a licensed social worker, I need to attend 40 hours of training every 2 years to renew my license. I need to complete 26 hours this year. This will fund the conferences, meals and lodging for me to complete my training hours.
We should be able to fully fund all of these items from our tax return. This is a huge relief to us to know these expenses will not have to be worried about! As you can see there is no Big Screen TV on our list, but instead many other things that give us a huge sense of relief knowing they are fully funded for the year. The concept of saving for future expenses is called a “Sinking Fund”. If you want more info you can read our blog post about “Sinking Funds” and how we organize our finances.
We are different people with different priorities….we live a simpler life striving towards our goal to be DEBT FREE, (and financially secure when we retire!)
Wishing you all a wonderful week!
Blessings…
Paul and Jen
Joyfully Living Below Our Means
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