5 ways to use your Tax return to reset your life.

When you are low income, and a single parent Tax time is like adult Christmas. It’s the time of year that makes all the hard work you do all year long Letterly pay off.

This year will be even better for some of us, due to all the extra money the government is giving out.

We all know the reason (they are giving all this cash) is for you to put that money back into the economy (that’s right they want you to spend it all). During this time everyone and their mama is going to have a sale. From Home Depot to Walmart, everything and anything you can think about buying will be on sale and begging you to buy it.

However, instead of spending your tax return money on all the things that you want and can’t normally afford (the government may not be happy with you not throwing it away) You can use your tax return to better your life or situation.

Today I will be going over a 5-step system that will help you use your tax return to effectively rest your life.

Step one

Zero balance

The first thing you need to do is pay all your Core Bills to a zero balance.

Your Core Bills are all your household bills rent, electric or gas, water and trash etc.

This is the time were if you haven’t started to budget you start a budget plan that you are able to stick to.

Why?

With your bills paid up in full you are now able to track your spending and start the habit of paying your bills on time and in full. Also, you are able to see what you are paying on that you don’t need, and you can eliminate these things from your budget.

Step two

Pay yourself

Remember that charity starts at home. Take some of the money and put it up for an emergency fund. Most people that live on a low-income budget do not have money put away in case of an emergency. This is one habit that keeps us living from check to check (not having a backup plan) this is your opportunity to get a head of the game, and how you do that is by having money on hold.

Make sure that you put it in a Money Market account this way it’s making money as it set’s, and you add to it.

Step Three

Take care of home

This step has two parts (if you have children) the first thing you do if you have children is get everything that they need that you are normally unable to get (key word is Need). Like clothes and shoes, the next thing you are going to do is Stockpile your home.

If you don’t have children, then the only thing you need to do is Stockpile your home.

Always take care of your children first.

Why stockpiles?

The reason you are going to stockpile your pantry, personal care, cleaning supplies, refrigerator and freezer is so that you can eliminate these expenses from your monthly budget.

It’s better for you in the long run to remove things out of your monthly budget so you have more money to save. By stockpiling your home, with money that is not coming from your paycheck you are setting your family or yourself in a position to remove yourself out of a financial hole or you will be more financially stable. The smart way to do this is to have a stockpile for at least 3 to 6 months (if you can have a year’s worth that’s even better).

How does this help you?

  1. you don’t have to buy food for a while- so that’s money you save
  2. you don’t have to buy cleaning supplies for a while- so that’s money you save
  3. Your kids don’t need anything- so that’s money you save
  4. you don’t have to buy shampoo and conditioner or toothpaste for a while- so that’s more money that you save

Step Four

Pay what you can short or long term

Pay bills that you are able to pay up to a few months in advance or even up for the year. This takes them out of your monthly budget and frees up more money for you to save.

Remember you want to have as much money as you possibly can to put into savings or investments throughout the year. Freeing up money from your paycheck is key to financial stability.

Step Five

Pay down your debt

Credit is everything in the life that we live. Once you have your day-to-day finances in a manageable state you want to pay down as much as you can without having to use money from your paycheck.

My advice to you is to use the Snowball system

pay off as much as you can in lump sum, start with the little bills and work your way up. If you are able to pay off all your debt that’s great (and you are truly blissed if you don’t have student loans and hug credit card debt).

If you, have money left after all of this, do something for yourself.

That’s right give yourself a reward for bettering yourself and your family financially (I would not advise you to do anything crazy or spend all of what you have left) try to have a little to add to your savings.

Will, that’s all that I have for today, I hope this helps you on your journey.

Thank you for reading Everything Frugal.

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