Our Rough Draft Plans for a Tax Refund
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I just got my W-2 this week and I’m excited as I’m expecting a refund this. My husband hasn’t gotten his yet, so we’re just playing the waiting game. I hope I entered the data right; it would be horrible to have to pay taxes and then find out we owe some. I got several estimates and show that we would owe money. Last year we receive a refund bigger than this, but I’m budgeting for the smallest refund as a buffer and a way to keep my hopes in check.
Right now our joint savings account is a combined emergency fund/house fund account. We dump an extra from our joint checking that we didn’t spend that month (we do keep a buffer in checking) and my husband has a regular monthly deposit in it.
The tax refund will go into the joint account and we’ll not touch it. We figure that would be best and it’ll be ‘forgotten’ until we need, hopefully as a down payment on a house. When I say house I mean a condo or a townhouse. There’s only two of us (three if you count my cat) so we feel that a house isn’t necessary. If we somehow got a miraculous deal on a detached, then we’d consider it. Also by looking at condos, we can perhaps living closer to the city, which would allow us to possibly use public transit. I was born in New York City (visit many times for family, but left when I was young) and I have no qualms using it as long as it is consistent. (Currently in this city, the buses have been known to be off by 20 minutes. You could be at the bus stop at the right time and just missed the bus, then you’d have to wait an hour before the next one comes.)
Some savvy reader will remember that my goal is to pay off my car loan as possible and may wonder why I wouldn’t use the tax refund to speed that up. Here are my reasons for planning it this way:
- It’s my car loan. I got this before I married my husband. I feel that I should take responsibility for this. He bought his car outright, so I don’t think it’s fair that he pays for mine.
- I use my car 95% of the time. If my husband drives, he likes to use his car, a two door with slightly better mileage.
- I can afford to pay my car loan. If I was unable to make the minimum payments, then it would have to be discussed, but I’m doing alright right now.
Well, that’s our plan. What are your plans if you are expecting a refund this year? Any suggestions?
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Jake Stichler
I expect to get a small refund, on the order of probably less than $100. It was a couple of paychecks into the 07 Hersheypark season before I realized I could exempt myself, the temp agency completely refused to honor my exempt status because they don’t know what they’re doing, and the security gig didn’t even notice it until a couple of paychecks into the job.
January 20th, 2008 at 11:35 pmGreen Panda
Congrats on getting the money! Any amounts is good. I wish you well on tax times.
January 21st, 2008 at 9:27 pmLiving Off Dividends
umm…now that you’re married, aren’t you supposed to make sure both of you have similar financial goals?
why don’t you pay off the car and use the payments towards a vacation or a investment account?
January 22nd, 2008 at 9:10 amGreen Panda
We’re having that discussion, but as you see with the post, I’m having some reservations. If anything changes, we’ll put that in there.
January 22nd, 2008 at 9:26 amBlue Panda
After I saw Green’s post, we talked about the plan. As she said, she sees it as her responsibility to pay off her own debt, and that if I paid it off then it wouldn’t be “fair.”
So I offered an alternate plan: we use the refund to pay off more of the loan, and she takes note of the amount contributed. After the loan is fully paid off, she can continue to make the same “payments,” except they will go into the joint savings until the contributed amount is covered.
That would save us some money since interest rate on the car loan is higher than the interest rate on the joint savings account, and she wouldn’t feel that she unfairly made me pay off her loan.
She hasn’t decided (and we haven’t filed our taxes yet), but I hope she takes the alternate plan, or at least a variant on it.
January 22nd, 2008 at 9:15 pm