Thursday, April 17, 2008

Freedom Finance: Refunds

Jerry is going to replace the window in the dining room when his comes in. Sherrie is going to buy new clothes and that cute purse she’s been admiring for months. Shortly, Dustin will replace the sound system in his car and Jessica will buy a new computer.

What are you going to do with your windfall from the government this year?

I'm talking about both your tax refund and the stimulus rebate.

If you’d like to experience freedom financially, here’s a question for you: why are you giving the government a free loan for a year? That’s what your tax refund amounts to. Throughout the year, you’ve allowed your employer to take more money for taxes than you really owe, giving you a large return every year.

But it’s money you’ve loaned to Uncle Sam interest-free all year.

It’s your money that you could use to pay for the higher cost of gas and groceries through out the year. You may not get that new sound system but you may manage better month to month without using credit, thus avoiding more debt.

Go over your withholding so that you get a larger paycheck and less refund.

Now, what should you do with the stimulus refund? First, tithe on it. Then, if you have credit card debt, pay it down. You will have instantly earned that debt’s interest rate – which is probably high on a credit card. Apply the refund to your highest-interest debt.

If you don’t have debt, invest this refund. Build up an emergency savings account or, if you already have that, add the money to an investment.

Or, if God so leads, consider donating this refund to a worthy ministry. There’s incredible freedom in opening your fist to give flight to the funds God provides you.

Once Jesus, in talking with money-loving Pharisees, told them, “What is highly valued among men is detestable in God's sight.”[1]

Manage your money so that you bring honor to God, not to the values of people.

[1] Luke 16:15


Maxine said...

Wow, you've given some good advice here, Kathy. And biblical advice. I know of a few folks who prefer owing at tax time because they do not want the government to have interest free use of their money. That same money could be put in savings and earn interest. I don't know what we're going to do with out stimulus refund. After tithing, it sure would be nice to use some of it for some sort of ministry. I wish I could use some of it to self-publish that book [wink], but I know there are more important needs, such as my husband's eye problems. We'll see how God leads.

Kathy at Sumballo said...

Maxine, thanks! You're wise to see how God leads. I'd love to hear what you decide - and why!

Debbie said...

Good advice, Mom - we have done similar with our expected tax refund (we owed last year, got back this year, but that was due to a lot of business write-offs last year). The only thing I would vary just a little is to put in an emergency savings account before paying off debt. That way, if the transmission blows, you have money in the bank to fix it, and don't have to go farther into debt to pay it off. But that is just my two cents! :-)