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Money Management

Why a Smaller Tax Refund is Better

Why a Smaller Tax Refund is Better

This post may contain affiliate links. Check out my Disclosure Policy for more information.

Tax season is upon us, friends! Being a personal finance nerd, I love this time of year. I love getting my documents together and seeing where I am at in comparison to where I was at the end of the previous year. It’s awesome to see how I have progressed on my big money goals.

Normally, I get a pretty large refund and it’s nice to get that big check to apply to debt, but the reality is that it just doesn’t make sense! The money you get in a tax refund check is just the money that the government took from you throughout the year. This is money that should have been in your back pocket throughout the year, it’s the money that you overpaid.

However, you should make sure that you get some sort of tax refund each year, this way you don’t have to owe taxes. You should figure out what you need to claim in order to get a small tax refund. This will allow your paychecks to be larger throughout the year and you still won’t owe at tax time.

There are a few things you can do when it comes to tax refunds to make sure you are prepared to file.

1. Check out the withholding calculator and fill out your W-2 correctly to get a small tax refund.

The truth is that sometimes it’s easier to just claim 0, just a big refund and call it a day. But the reality is that there are resources out there for us to use, so we don’t have to do this. Plus, like I said before, a large refund just means that you overpaid every single month. This is money that can be in your pocket every month!

This is why my first suggestion is to head over to the IRS website and check out their withholding calculator this will allow you to quickly see where you stand. After you finish the withholding calculator, you will have a better idea of what you should be claiming on your W-2 so that you get a small tax refund and more money in your wallet every month!

2.Organize your documents as you receive them.

The best thing I ever did for myself was create a specific place for my finances. I have everything in a folder for my taxes and add to it as my documents start rolling in. This makes filing my taxes so much easier. When I have all my documents ready, I can easily sit down and file them.

I used to be a hot mess with my tax stuff. Things would be everywhere and it would take me forever to find everything to file. It honestly was something I dreaded doing every single year, until I started keeping my paperwork organized. Organization is definitely key in filing your tax return.

This is especially important if you have complicated taxes or something that you need to keep track of throughout the year. For example, as a teacher I would be able to claim $250 I spent for my classroom, I’d need to keep my receipts throughout the year for this. Organization made this super easy for me!

3. If taxes aren’t taken from your pay, make sure you create a sinking fund for this!

I can’t stress this enough! If you have a profession that does not take taxes from you, you absolutely NEED to create a sinking fund for this. Taxes are not an emergency, we know they happen every single year, we need to prepare for our taxes. Tax time should not derail our finances, it should be a simply file and pay, if we aren’t paying taxes throughout the year.

By creating a sinking fund, tax time will be a breeze because you will already have the money in your account to pay your taxes. My suggestion is to take at least 30% out of any pay you receive and put it into a sinking fund for taxes. If you don’t need this much at tax time, then you can choose what to do with this money.

The easiest way to do this would be to budget for it every month, this should be a line item in your budget. If you need help with this, you can subscribe to my email list to get a PDF of my budget template, or you can purchase my Google sheets template that has the math formulas already inputted for you.

Remember a smaller tax refund means that you are claiming the right number on your W-2!

I feel like a lot of times people brag about their big tax refunds when in reality, it just means they are giving their money away each month for that big check. By changing your number on your W-2, it will allow you to get that money throughout the year, instead of in a large check once a year! Have much are you getting in your tax refund?


When to Slow Down Debt Payments

When to Slow Down Debt Payments

When you’re paying off debt it can be difficult to slow down the process. I know for myself, I am so focused on paying off my debt that I sometimes need to be brought back to reality. It’s important to remember that a debt free journey is part of a bigger plan.

For myself, my bigger plan is to be able to live a life I love without having to think about money. But that also means that sometimes I need to not focus so heavily on my debt free journey and think about the reality of life. When you’re so focused on paying off your debt and the life you will live after your debt is gone, this can be difficult.

Sometimes, it’s important to slow down or stop extra debt payments all together. It depends on your life and what your goals are, but sometimes it needs to happen for what makes sense in the long term.

1. Unexpected life events would require you stopping extra debt payments.

This can be a long list and really depends on what your income is. But, any unexpected events, like job loss, or medical issues, could mean slowing down or stopping extra debt payments all together. If you’re single, this would definitely require you to stop making extra debt payments. But, if you have another income to rely on, it’s possible that this wouldn’t be the case.

My suggestion for any unexpected life events, is to stop extra debt payments and hoard any extra money. The reason this is important is because there is so much unknown in these events, for example, the recent government shutdown. Anyone who experienced the shutdown knows that the end is unknown. This means that you don’t know when you will be paid.

This is why it is important to stack any money you have coming in, even if you have a bit extra at any given time to throw at debt. That extra money will be there once you get through this unexpected event. Once things have settled down, then you can assess your finances and make an extra debt payment.

2. Any unknowns in the future could slow down your debt payments.

If you’re unsure about things in the future, you may want to consider slowing down or stopping your debt payments. This could be something like your job security being unknown, you may want to stop making payments or at least slow down.

This could also be something that you’re planning to do. For example, I am right now unsure of where I’ll be working and am planning to move this year. So, I am not stopping my extra debt payments, but I am slowing it down to put more money into my emergency fund to plan for it. This way I will have extra money to cover the unknowns of the second half of this year. Once things get settled for me, I can assess my finances and make an extra debt payment.

It is more important to plan for these unknowns when you know they are coming, then to simply hope things go according to plan. Hopefully the money you save up won’t be needed, but in the event that it is needed, it will be nice to have.

3. Needing to cash flow necessary expenses.

Life happens and sometimes you need to purchase things that wasn’t planned for, think car or house problems. It is better to slow down or stop debt payments to cash flow the purchase, then to go into more debt to purchase something. It’s pretty counter productive to being sending extra money to debt, but going into debt at the same time.

One way to avoid this is to cash flow the expense, meaning you send all extra money until you have the cash saved up for the purchase. If it is an expense that won’t be needed for a while, you can also start a sinking fund for it.

Everyone is different and decides what is considered a necessary expense, but it’s important not to go into debt for these things, if it can be avoided.

Keep in mind your long term goals when planning your debt free journey

Everyone wants to get out of debt quickly, but life happens and sometimes our plans don’t work out. It’s important to remember what you have planned for the long term, then to make extra debt payments. Sometimes, it makes much more sense to slow down or stop extra debt payments to get through a specific situation life has thrown at you. Just remind yourself of your long term goals in these situations. Have you had to stop or slow down extra debt payments?

Money Management

3 Things You Can Do Today to Get Your Finances Together

3 Things You Can Do Today to Get Your Finances Together

This post may contain affiliate links. Check out my Disclosure Policy for more information.

When it comes to personal finance, it can sometimes feel overwhelming. This is especially true if you don’t know where to start. Trying to tackle your finances in one swoop is bound to lead you to failing.

Not because you can’t do it, anyone can do this, but it’s a lot to do in a short period of time. Just like with any big task, it’s good to start small and break it down into more manageable parts.

This is exactly what I recommend you do, if you’re just starting out at getting your finances together. There are a couple things that you can easily do in one day to immediately get your finances to a better place.

1. Track your expenses to manage your finances better.

The very first and most important thing to do is to start tracking your expenses. If you use any kind of card, you can easily pull your bank statements and look at the previous month to see where your money went.

I always suggest printing it out and highlighting for each specific category. For example, groceries, eating out, shopping, personal care. You can really make any categories you want and works for you. No one set of categories works for all and your budget will reflect the things that you value once you cut down on your expenses.

If you have always used cash, you can either use your receipts from the last month or start tracking your expenses today. Ideally, you want a month of expenses to get a realistic picture of how much money you spend in a given month.

2. Write out a draft budget to manage your finances.

This is going to be life changing for you once you create and execute a budget. Drafting it out for the first time can be overwhelming, but just get it down somewhere.

You can do this on paper or on the computer, whatever works best for you. If you subscribe to my newsletter, you’ll get my PDF to help track expenses and budget for free. If you’re more of a computer person, you can purchase my Google sheet templates that have all the formulas in for you already!

The important part about your budget in this stage is to just get your income and expenses down on paper. Write out your actual budget, don’t write out the one you want to have. Write out your actual income, write out the actual amount you spent on Chipotle. This will be eye opening and why it’s so important.

Once you have a draft of your budget, you can start looking at habits that you have. I wouldn’t suggest making any drastic changes, but maybe a few to give you some extra cash flow. Find the things you don’t value as much and cut those first. If you’re a follower of KonMarie, then you’ll get the whole sparking joy thing. Anything that doesn’t spark joy just has to go!

3. Emergency Fund.

If you don’t have an emergency fund, you need to get one set up ASAP! An emergency fund is arguably the most important thing when it comes to managing your finances. Without it, you set yourself up for disaster in the event of the unexpected.

I always recommend you to have at least 1 month of expenses saved up at any given time, at a minimum. Once you have a month, I’d switch to focusing on debt, but still contribute to your savings. Personally, I contribute $25-$100 every month depending on where I am in life. Right now, there is a lot of unknowns for me in my future, so I’m contributing more while paying off debt.

I recommend having your savings somewhere that is easy to get to, but not too easy. For example, I have an account with an online savings bank called Ally. I prefer it to a regular bank because it earns me more interest and is a little harder to get to. If I’m going to be having money sitting around, I want it to be working for me!

I suggest looking into savings accounts today and choosing where you want to keep your emergency fund.

Your finances won’t change today, but they can start to change today.

Finances are an everyday thing, not just a set it and forget it. You need to actively be doing something for your finances everyday, even if it’s just tracking your expenses or updating your budget. Your finances are a never ending journey, but it’s great to get started on these 3 things today. If you are trying to get your finances together long term, I have the perfect guide to get you started! What steps have you taken recently to get your finances together?

Money Management

How to Prepare for a Furlough

How to Prepare for a Furlough

This post may contain affiliate links. Check out my Disclosure Policy for more information.

Last week I posted about saving money during a government shutdown. This is to help the many people that are struggling to make ends meet currently while not being paid. The reality of our government is that a furlough can happen at any time and with little notice. Not enough to prepare at least.

That’s why I’m sharing with you how to prepare for a government furlough because realistically, it’s going to happen again. Why not take this experience and learn from it. Make sure that you’re never in a situation that you are struggling again.

Yes, this is the longest government shutdown we have ever had, but it definitely is not the first. This means that we can and should prepare for this because it’s going to happen again.

Realistically, everyone should follow this advice because it makes for financial security in the event of something unexpected happening. Anyone can have a situation arise that throws their world upside down leaving them scrambling, not just from a furlough.

1. Track your expenses & make a budget.

The very first thing you need to do is track your expenses for a month and create a budget. By tracking your expenses, you are seeing exactly where your money is going. This allows you to easily see your expenses in a given month. It also makes it much easier to determine your expenses that are not fixed, like groceries.

Once you have tracked your expenses, you need to create your budget. Start with your income and then list your fixed expenses, followed by your other expenses like groceries. I recommend a zero based budget, you can find a post that outlines how to get this set up here & how to budget on a variable income here. I also have created some easy templates on Google Sheets to track your expenses and create your budget, with the formulas all done for you!

2. Save your emergency fund for a furlough.

Once you have created your budget, all of your leftover money needs to be heading towards your emergency fund. This is why I recommend a zero based budget, at the end of the month, you zero out your budget by sending all left over money to whatever money goal you are working on. This will allow you to quickly save your emergency fund because you have budgeted every penny in your budget.

Any extra money you have come in during this time, like refunds or bonuses, goes to your emergency fund. This should be kept in an account that is somewhat easy to get to in the event of an emergency, I keep mine in a savings account with Ally. I recommend at least 3 months of expenses in your emergency fund, but you can find out more information about it here.

3. Lower your minimum expenses for a furlough.

The best part about budgeting is that you can easily see exactly where your money is going every single month. The goal is to get your required minimum expenses to be as low as possible. The reason this is important is because when you are in another furlough situation, you don’t want to need to use your emergency fund. By having low or no required payments each month you are allowing yourself to go longer without using it.

There are many ways to lower your expenses, I wrote all about it here, but I also recommend finding ways to have low housing costs and minimum to no debt. Paying off your debt means that you won’t owe money when another furlough happens, you’ll be able to stretch your money much further.

Paying off debt obviously doesn’t happen over night, I’m still paying off my $201k after over 3 years, but I am down to $88k now. It takes time, but with a plan in place, you can do it. I recommend creating a debt payoff plan using undebt.it, this will allow you to create a plan and help you execute it. Another recommendation would be to refinance your student loans for a better interest rate, you can use my referral link to get $200 when you refinance!

We know that another government shutdown will happen and I want you to be prepared for it! By executing these steps, you will be prepared for when you experience another furlough and won’t be put in a terrible situation. I’d love to hear from those impacted by this government shutdown and how it has affected you. 

Money Management

Saving Money During a Government Shutdown

Saving Money During a Government Shutdown

This post may contain affiliate links. Check out my Disclosure Policy for more information.

Everything that is going on right now with the government in the United States breaks my heart. I can’t believe how many Americans are not being paid right now during the government shutdown. There are many that are working and will eventually get paid and others that are not working and will not see money that they were anticipating to come.

This has been the longest government shutdown in U.S. history and I hope that it ends soon. The reality is though that this happens in our government and I hope I can help you to save money during and prepare for a future shutdown.

1. Look over your expenses and cut all unnecessary expenses.

There are plenty of expenses that can be cut out. Going out to eat, shopping, your grocery budget, hair cuts, anything that isn’t an absolute necessity, cut it out for now. Go through your pantry and freezer and cook what you have instead of buying all new groceries. Find meals that are cheaper to make, beans will be your best friend!

It can be hard to look at your spending and find things to cut, but think about if there are cheaper ways to do it, or if you even need it. If you don’t need it, get rid of it for now.

2. Find free activities to do.

Of course by cutting your expenses it’s going to mean you are probably getting rid of some fun things you normally do. This doesn’t mean do nothing fun, just find free things to do. Use the time to get things done around your house, read, have friends over for wine night and use things you have around your house. Get creative in your activities and you’d be surprised how much you can do for no money.

3. Pay strictly minimums on everything.

This can be hard to do if you’re trying to become debt free, but this needs to be held off until after the government shutdown is over with. Even if you have some money coming in from side jobs, it just isn’t worth it to put extra money to debt right now. There is no way to know how long this government shutdown will last and you’re better off paying minimums now and hoarding your cash until this is over.

If you put extra money to debt now, but then need more money in a month and you don’t have it, you’re going to need to use debt. You’re better off paying minimums now and putting all cash aside to be used eventually if needed.

Preparing for a future government shutdown.

The reality is that this happens and can be prepared for in the event that it happens again. There are a few things you can do to prepare if you are a government employee.

My suggestion is you need a 6 month emergency fund, at the least, a 3 month emergency fund. This is money that you don’t touch unless there is an emergency. By having this fund set for yourself, you will be able to live for a few months while not being paid.

If you don’t have one, you need to create a budget ASAP! I personally recommend a zero based budget, but you need to do what works for you. By budgeting, you know exactly where your money is going and allows you to quickly make adjustments in the event of a shutdown. If you need help creating a budget, I have a template that you can use!

You need to find ways to save money on the things you need to buy, like housing or your debt. I strongly believe in asking for lower interest rates or refinancing, especially for student loans. I personally recommend Earnest, use my referral link to get $200 when you refinance!

Create other streams of income for yourself. I strongly believe in working multiple jobs, if one stream stops, you still have other streams coming in. This will allow you to still have money coming in, even when another government shutdown happens. Also, there are chances of increasing a stream in the event of a government shutdown.

Create a plan to pay off your debt. The reason this is so important is because in the event of a government shutdown, your monthly bills will be much lower without any debt. Undebt.it is a great debt payoff planner to use to help you get a plan in place to get your debt gone for good!

Remember, we can prepare ourselves for a future government shutdown.

This government shutdown has been the longest one in our history, but it doesn’t mean it will never happen again. I hope that this tips can help you get through this shutdown, and help to prepare you for a future government shutdown. If you have any questions in getting yourself prepared for a future shutdown, or getting through this shutdown, feel free to shoot me an email and I’d be happy to help! How has this government shutdown impacted your finances and how to prepare for this?

Money Management

Living Your Best Life on a Budget

Living Your Best Life on a Budget

This post may contain affiliate links. Check out my Disclosure Policy for more information.

The first thing everyone thinks when they hear budget is being restricted. I know for myself at 22 when I thought about creating a budget I thought I’d never get to do anything, since I’d be on a budget.

The reality is that this just isn’t the case. Budgeting is simply managing your money, it doesn’t mean you need to hole yourself up at home! Your budget will set you free to spend your money because you will know exactly where your money is going.

By following these steps, you will find ways to also live your best life while still keeping to your budget. If you need help setting up your budget, I have a template you can use!

1. Determine what you value.

I am a firm believer in spending money on the things that you value. Track your spending for a month and see where your money is going. Which purchases were needs and which were wants. From your wants, what do you truly value, what brings joy to your life.

This is obviously different for everyone! Whatever it is that brings you joy, make sure you include that in your budget. The things that you could go without, cut that expense from your budget.

This doesn’t need to be extreme at the beginning. I honestly recommend not cutting much out in the beginning of budgeting because you will feel restricted, when that isn’t what budgeting is. Cut things that annoy you. I remember when I saw all my expenses the first time I realized the absurd amount of money I spent at Chipotle.

Of course, I didn’t cut Chipotle from my budget, I just cut back in how frequently I went. At the time I was a full time grad student and woking full time. Once a month I worked from 8:00-3:00 and then had back to back classes from 4-10. These were the days I treated myself to Chipotle.

Now I simply have a restaurants line in my budget that I use however I want. I found a balance of what I feel comfortable with after a few months of budget, and you will find that balance as well.

2. Find ways to lower your necessary expenses.

Of course there are things that you just can’t cut from your budget, housing, groceries, utilities, etc. These are necessary expenses and they are going to be a part of your budget, but you should find ways to lower them.

For example, I moved back home with my parents after graduating to cut a major expense when I really didn’t have money to afford moving out. Another great way to lower your expenses is to pay off your debt. Of course this is going to take time, but ultimately it will get rid of a necessary expense in your budget once it is gone. You can use this free awesome tool that helps you calculate your debt payoff date to help motivate you.

Another way to lower your expenses and pay off your debt faster is to refinance your student loans for a lower interest rate. I refinanced mine with Earnest to get a 2% lower rate and you can too, and get $200 when you refinance with my referral link!

The best part about lowering the necessary expenses you have is that these expenses are typically the higher ones. For example, if you can lower or eliminate your housing expenses, it’s going to make your money go so much further for you.

3. Tweak your budget every month.

After you complete a month on your budget you need to reflect on how that month went. Did you feel restricted? What made you feel restricted? What brought you joy this month?

By reflecting on your budget it will allow you to spend money where you want to spend it. For example, going out with my friends for happy hour on Fridays is something that I enjoy a lot. I plan for it and make sure it is in my budget every month.

Something that I don’t enjoy as much is going out for lunch and dinner during the week. For one thing, I don’t have time for it, so I don’t budget for it.

Find the things you love and include them in your budget. A budget is meant to give you permission to spend, but spend on the things you value. When we waste money on the things that don’t bring us joy, we are simply throwing money away. How do you budget for your best life? 

Money Management Saving Money

How to Financially Prepare for a Move

How to Financially Prepare for a Move

If you’ve been following my journey since the beginning, then you know that I graduated in 2015 from my graduate program and moved back home to my parent’s house in New Jersey. This was basically a necessity because my minimum student loan payments were going to be $2,000 and my income was going to be about $3,000/month for 10 months of the year, check out my post here about paying off debt on a 10 month salary.

The numbers just wouldn’t add up if I moved out, especially not in New Jersey and the cost of living. So, I headed back home and have been living here every since aggressively paying off my $201k in student loan debt.

Of course, I don’t plan to stay here forever, but it has been a wonderful way for me to get ahead in my student loan payoff that would not have been possible otherwise. I never would have been able to pay the amount I have if I was paying for rent every month.

Now that I have paid off a significant amount of debt, I am planning to move in the near future. This means that I will have new expenses to add to my budget. Of course, I can’t plan for everything, but I highly recommend creating a budget based off of estimates to get an idea of what you can afford.

I do this a lot, whenever I am trying to figure out if something will work out, or if I need to figure out how much I need to earn in order to afford something. I did this same exact thing when I was getting ready to graduate and it is when I realize I wouldn’t be able to afford rent any my minimum student loan payments.

Since I am planning to move out, I figured I would share with you the things I am doing to prepare my finances for my potential move.

1. Create a new “budget.”

This budget is obviously not going to be the one that you use when you actually move, but it can be the start of it. This budget is hypothetical so that you can figure out what you can afford in a move. If you have not found a new place to live, I would suggest looking at cost of rent or mortgages and round them up a bit. This will allow you to over budget and be more prepared when you actually move to this area.

I would also suggest looking at average cost of telephone, cable, utilities, etc. for this area. This will allow you to get a good idea about what your expenses will look like once you move. I would even go so far as to see what are the gas prices and how the grocery store prices compare. It may sound crazy, but these are all things that are going to impact your budget once you move.

By creating a budget that is as realistic as possible, it will allow you to see if you can realistically afford to move to that specific area. When I was graduating, I thought I was going to stay in Syracuse to teach. What I realized when I made my “budget” was that I couldn’t afford everything on my potential salary and cost of rent. If you need help creating your budget, I have a template you can use for this!

2. Determine your moving costs.

Moving can be expensive, especially if you have a lot of furniture and are moving far away. I would suggest doing some research about the potential costs of moving in your area before you actually are ready to move. For example, how much is a moving truck? If you are shipping anything, how much will that cost?

Once you have an estimate of how much it will cost to move, you can start a sinking fund for this. This will allow you to be prepared when you actually move.

3. Determine if your emergency fund is enough.

When you move, your monthly expenses will most likely change. This means that your emergency fund will need to change as well. By completing step 1, you’ll be able to get an idea if your emergency fund is enough when you move.

If you’ll need a bigger emergency fund, I would suggest trying to increase it before the move as much as possible. With moving comes the possibility of unexpected expenses and it’s always better to be over prepared.

It’s better to be over prepared.

When it comes down to it, it’s so much better to be over prepared when you’re planning to move. Once you’re all settled, you can always move that money somewhere else, if there is any left over. I’d love to hear your moving stories, have you prepared for a move?