How Do I Make the Most of My Tax Refund?

Speaker A00:00:00

Your refund shows up and suddenly money isn't just money, it's tension. Yeah, you want stability, but your spouse, hey, they want a vacation. And you're trying to protect that unity while still making a smart decision.So today on the show, I'm going to talk. What do you do next to make sure this choice is with peace instead of press? Hey, friend, Ralph Estep Jr. Here.This is financially confident Christian. My goal is to help you break that cycle of financial shame and do it with confidence. And today we're talking about that unexpected tax refund.If you caught yesterday's show, we talked about that what if you owe situation. Well, today we're going to flip it around and we're going to say, wow, we've got an unexpected tax refund. Now what do we do with it?Well, let's get right to today's question, Ralph. We just finished filing our taxes and we're getting a really nice refund. Honestly, we weren't expecting it.So it sort of found money and my husband wants to use it for a family vacation, but I think we should use it to pay off some debt and add to our emergency fund. What should we do, Ralph? Well, again, thank you for your question and I can feel the tension in your question.If you've got a question for this show later on, I'll tell you exactly how to send it to me. But today's big idea is we've got to give every dollar a job that protects peace before buying turns into too much fun. So let's start by saying this.First thing I want to get to right now, stop using the word found money. It's time to pause that found money story. This is household money. This isn't a bonus when you get a refund on your taxes, guess what?They're refunding your money. You've been paying this in all year long.Now maybe you've got some credits and you've got some bonus things that you weren't expecting, but this is your money.I, I've been dealing with this for 30 years and I always kind of chuckle when somebody's sitting in front of me and they're like, Ralph, oh, we're so thankful you got us a big refund. And I always say to them, I got you your own money back. It's your money. But the goal today is to really how do we have peace at home?Because what you're telling me in your question is that you've got what you called found money. I'm going to say it's it's household bonus for. For lack of a better way of saying it.But there seems to be a difference of your husband wants to do this and you want to do that. So here's the first thing I'm going to tell you. Don't make any decision right away. When you hear that, you've got to revitalize.Maybe you're listening to this or you're watching this right now and you're saying, hey, I'm in the exact same situation. Don't make a quick decision. Sleep on it. Second thing I want you to do is think about stabilization first.And this is where you're really going with your question. Because what I hear you saying is, Ralph, I want to stabilize things. Now, my husband, he wants to go on a vacation, which I think is great.Doing things together as a couple is fantastic. But. But my personal view is start with creating a small safety cushion. Here's the thing I would say to you. Go look at your emergency fund.If you've got an emergency fund and it's less than $1,000, it's a big takeaway for today. If it's less than $1,000, I want you to put some money there first.So if you've got $700, for example, number one thing, push $300 of that refund into that emergency fund. Now, if you've already got a thousand dollars, I'm still going to encourage you to do something here. Push some more into that essentials fund.If you know what your monthly expenses are, you're like, here are my essentials. Push some money over there. Because this can help you win in the long run because you got fewer surprise expenses that hit that credit card.If you, listen, if you're like most people, when you have that surprise expense, and let's say, and we'll talk about this in the future, but when you chew through that emergency fund, what do most people go to? They go to that credit card. So this is a great time to sort of fortify and build up that emergency fund.Here's the next thing I'm going to encourage you to do. And this is what you're alluding to. You want to get out of debt. This is a great time to knock out one debt. Because listen, here's.Here's what I found in practice, and I've been doing this for a long time. Knocking out one debt can really build momentum. And listen, you don't have to pay off all your debts with this refund.Maybe your refund's not even big enough to do that. But maybe go find the smallest balance of a debt you have or one that has the highest interest rate.And maybe you can't afford to pay off the whole thing, but you can certainly send a big chunk towards that. So make one clear payment and then celebrate this. Even a little win will help build some unity.Let's get back to your husband side of this scenario because what you really want here is you want peace and joy. And that's really what I think. The main key to this answer today is I want you to create two simple buckets in your mind.I want you to have a stability bucket and a family trip bucket. Because listen, you're not going to win this if you don't try to figure out some kind of compromise.You know, when I work with couples, the number one thing I say is we got to find a way to compromise. Both parties can't win and both parties can't lose. So this is where you think about how can I split this? Maybe you do a 70, 30 split.If you're feeling like your debt is real heavy right now, maybe you go to an 80, 20 until you study that. But you've got to put a joy or a family trip portion inside of this because if not, guess what's going to happen?It's going to disappear and then you're going to have that tension and your husband or your wife's going to say, you know, we really could have done something here, but we didn't do it. Here's another thing I'm going to encourage you to do, make next year calmer.I always talk on the show about building systems and yes, it's great to get a refund, but again, what that means is that you are getting your own money back. And maybe you're thinking, you know what, that's interesting because every month is super tight. Like we're trying to make this budget work.Man, things are super tight. Well, guess what, you could decrease your withholding and get more take home pay as you go. That would make things so much better.Listen, it's great to get a refund at the end of the year. I'm not going to argue. I remember when I first started my practice, people will come in and they'd be getting a huge refund.And I would say to them, listen, you really need to stop this now. I stopped battling with them because I realized for some people this is like their way to save money. And I totally respect that.No judgment here, but you have to understand that they're not paying you interest on this. And if you're carrying credit card debt, you're paying interest and you're losing money. So let's say you don't want to have that big refund anymore.Here's a real practical thing you can do. Go to HR and change your withholding. Let your withholding not be so, not so big anymore.And then maybe at the same time, you're saying, you know what, my husband has a point here. Maybe start putting away money into a vacation fund so it's not some accidental find. You just, you just been doing it all year long.You start putting that money, maybe each of you puts a little in each paycheck, what we call like a sinking fund. Because listen, here's the big takeaway for today. Peace in your marriage is part of wise financial stewardship.Because listen, think about it like this.If you don't have that peace in your marriage, in your relationship, I don't care how well you manage your finances, you're going to be doing it alone at some point. So you've really got to figure out, how do I make this work for both of us? So here's your big win for today.I want to really encourage you to go and look at that savings bucket. If you don't have an emergency fund, this is a great time to create one. Go into your banking app and go create that emergency fund.If you do have one, then fund it some more and go ahead and create that joy fund and think about how much can you put into that joy fund so that you don't have these surprises. And when you do have these, what you called found money, you have a place to put that. Well, let's get to our Bible verse today.I always want to ground us in scripture. And this one comes to us from Proverbs, chapter 21, verse 20. And it says the why store up choice food and olive oil but fools gulp theirs down.Now let's talk about why this fits today. Because this fits. Because if you think about it, it's not telling you to reject joy, not at all.But what it is telling you is to refuse those impulse decision. It's saying to be wise and we're wise. We, we store up things. We don't just gulp them down because.And this is what scripture is telling us, it's saying to us that those impulsive decisions. Remember when I started this episode with I said sleep on it. Don't make an impulsive decision.Well, the scripture is telling us because what it's saying to us, that bulls gulp theirs down. What does that mean to us? It means that those impulsive decisions steal tomorrow's peace.How about we pray together, Lord, you see the tension in our homes right now and you see how money decisions can stir up fear and cause tension in our lives. So Lord, we just ask that you would give us wisdom for today and peace for this very moment.Help us to speak gently, Lord, and to listen well and to choose what protects our family.And teach us to trust you with this refund, Lord, and help us to use it in a way that brings stability and honor to you and really keeps our family unity strong.So Lord, I just ask that you would guard our words today, soften our hearts and lead me into a clear pan with no regret attached, Lord, and we just ask this in the precious name of Jesus. Amen, friend, you can be wise and still enjoy life. You just have to do it in that order.And as I said earlier, if you'd like your question featured on the show, I would love to hear from you. That's what really feeds the show. It's questions just like the one we got today. If you've got a question, go to financiallyconfidentchristian.com/questionwe'll put this in the show notes, but it's also financiallyconfidentchristian.com/question so thank you so much for joining me today. I appreciate it that you give me a little bit of your time.If you're found value in this, I encourage you share this with somebody else. Just send them right to our website, financiallyconfidentchristian.com so stay financially savvy. God bless you and you have a great day today.