One thing that stood out from your post was that you are going to rely on a tax refund to pay off your loans to friends and then next year, pay off your loans to CC’s with your refund.
I know some people like to get a nice big check every spring, but it’s actually the equivalent to allowing the government to have more of your money than is required. Essentially, you are floating them a loan all year long.
From what I’ve read (I am no expert believe me ;-)) and I’m sure others would confirm, is that it would be better for you to have your refund money up front and working for you for 52 weeks out of the year. To get this done, you would adjust your withholding on your W-4.
Now you may thinking…”But, I might owe something at the end of the year.” Well, the IRS website has a tool to calculate the appropriate amount of withholdings you should adjust to so that you are as close to having no refund or charge at the end of the year.
Would anyone else confirm or agree in principle with this plan? I’m sure your friends and the creditors would rather have their money up front rather than after you have saved it up for a year by over paying your taxes.
The problem with this for us is that we get back double of what we pay in. We have lots of child tax deductions ;o) LOL
I do agree with you that we could have our money working for us all year long IF we were diligent enough to do that. My mother is an accountant. I’ve had her figure up all the different ways we could go about this. If we were to get back more through out the year it would only *work* if we put it directly into a savings. My dear husband would never let it get to the savings….he would order a pizza or something with the little extra we would get each week. Also, next time consider this better alternative to payday loans. Yes, I am talking about installment loans.
I know many people do this and I think it’s great. It just is better for us to get a lump sum at one time. Normally we don’t have problems keeping our finances on track and use the tax refund for big things we need. Pay our property taxes, car ins for the year, home owners stuff like that.
Thanks for the advice!