Avoid These Five Don’ts When It Comes To Your Refund
Creating a Legacy With Your Taxes – Part 3
What are you doing with your tax money? Since we’ve talked about filing taxes and how to use this process in creating legacy, the last lesson we must discuss is what to do with the refund (if any) you receive from filing your taxes. Congratulations if you planned to receive some money back and actually got something in return. You now have options. Any time you have unaccounted for money, money without a name, you have options. What will you do with it?
The Thought or Concept:
What plan do you have for this refund check?
What’s your strategy for it? Your life’s a business and every good business has a strategy. Now is the best time to have a plan. Like most (and I’m sure you know this by experience), it is easy to blow through money when you get it in your hands and there are no pressing needs or plans for it. You’ll take that money, spend it, and never remember where it all went. This is why when people receive large sums of money unexpectedly, they blow it and end up in a worse position, financially.
In this lesson, I want to give you a few “not to do’s.” While doing these “don’t do’s” would seem normal to do, you must resist the urge otherwise you’ll have the same old normal results in your finances as you’ve always had. If there is nothing more you take away from this lesson it’s this. You must have a plan for your money or you will fail in how you manage it. Let’s address these five “don’t do’s.”
Just as the rich [uncommon] rule the poor, so the borrower [the common] is servant to the lender. – bible.com/bible/116/PRO.22.7.NLT
What not to do with your tax money?
When you think about your money, remember this. Your money doesn’t work the same as everyone else’s money. In other words, you can’t spend someone else’s money and they can’t spend your money. Your circumstances, needs, and desires differ. With that said, what you want to do with your money is different from what they may want to do with their money. So we will discuss a few ‘don’ts’ that can help you best decide what you should do in the best interest of your life, your business.
- Don’t buy a car.
Let me just start with how crazy this idea sounds. [To the left.] What kind of car do you think you can get off a tax refund? Probably not the car you need. A person buying a car with a refund check is an indication that the person has no plans of buying a car. What I mean by this is… a cheap car requires a lot of maintenance money to keep it operating optimally.
A person who buys a car using a refund check isn’t in the financial position to make the car payment needed for the car they purchased. Otherwise, he/she might already have made such a purchase.
We’ve tried this and it led us to the lemon that almost ruined us. Don’t buy a car with it. That tip alone was worth you reading this, let move on to the next don’t (not to do).
- Don’t use this for a shopping spree.
Oh, you want to go shopping. Sure. Everyone wants to do a little shopping at times. But have you not ever considered that no matter how many shopping sprees (that’s what it means to take a tax refund and spend it on clothing) you go on, you still have a desire just weeks later to shop some more. What good is having a large sum of money that you spend and have nothing to show for it. Going on a shopping spree makes life worse not better. You’ve not improved anything about your life by going shopping. Putting nice clothes on, only hides the life that’s a mess. Don’t use it for a shopping spree. Let’s move on to the next don’t (not to do).
- Don’t pay your bills up.
There are fortunate people who have no idea what this means. “Pay my bills up.” Let me say this, I wouldn’t talk about this if I didn’t know what it means firsthand. Do you know how many times we said we’re going to “pay our bills up” using a tax refund? This phrase, I hate to tell you are used by people who don’t have a handle on paying their bills and have an even bigger problem with paying their debts. This phrase is a phrase that indicates a person is on the verge of even more serious financial issues. By the way, “paying your bills up” doesn’t stop them from coming. It simply postpones the inevitable; this cycle repeating. Don’t “pay your bills up.” It only repeats a vicious cycle that you’ve already placed yourself in. Let’s move on to the next don’t (not to do).
- Don’t avoid paying that debt you have.
While it seems like throwing your money away by paying on a debt you owe, the benefits will far outweigh that regret years from now. The problem with paying a debt is that most people in this position have never experienced life without such a debt or it’s been far too long and the quick fix, spending the refund, is more appealing. What one might not realize is that your efforts compound over time. If you compound bad financial habits over time, then you’ll later have more bad financial habits. When you compound good financial habits then you begin to feel some of the financial freedoms that most people will never enjoy. Don’t avoid paying that debt you owe. These debts will continue to keep a hold on you unless you do something with them. Let’s move on to the next don’t (not to do).
- Don’t use it on something that creates a recurring budget item.
That would be like using your refund to pay the installation fee for cable television. While it sounds good, you’ve just added another monthly payment to your household budget. When you see your life as your business, you’re not trying to increase your expenditures, you’ll try to reduce them. You’re not in the business of being less profitable, you’re in the business of making your life more profitable. Don’t waste money and incur more bills in the process. Don’t use it on something that creates a recurring budget item.
Take these five don’ts and teach them to your family. That’s what legacy is all about. It starts with you becoming something you can share with others. Legacy is you sharing what you’ve become so that another can benefit.
Today is Friday!
Instead of using your tax refund for the don’ts I’ve mentioned, use them as a tool, an instrument to get yourself, your business, out of the position of even considering these don’ts.
Question: Which of these five don’ts can you eliminate from your life?