Copyright 2006 Steve Hoven
Tax time is just around the corner. Are you getting a big refund this year? Well if you are, you are THROWING AWAY BIG MONEY!
CHANGE YOUR EXEMPTIONS ON YOUR W-4.
This is not the number of your dependents but the number of your exemptions!
If you are getting a BIG tax refund every year, you may love getting that check; however, you are actually giving the Government your money interest- free for a year. This is not a wise use of money .
The IRS stated, back in 2004, that the Average tax refund check was almost $2,300!!! That is almost $200 per month ($200 X 12 Months) that is given to the IRS INTEREST FREE!!! If you are getting a tax refund check of more than $300, you need to consider changing your exemptions. Feel free to send me any of your extra money. I will keep it for you until next year and NOT pay you any interest.
For example, if you got a $600 Tax refund last year (or plan on getting one this year), that is $50 a month extra in taxes that you paid last year. You earned no interest on it. If you want to, you can send me that $50 and I will keep it for you and a year from now send you the $50 back. That $50 could save you $100's of dollars in interest NOT paid if you applied it to your Mortgage.
Consider a person who has a 30 year mortgage on a $150,000 mortgage x 6%. If he or she made just 1 extra payment of $300, they would save over $1,400 in interest! Talk about return on their money!! That $300 could easily be paid by saving $50 a month for 6 months. $300 payments vs. $1,400 OF NOT HAVING TO PAY IN FUTURE INTEREST. THAT IS OVER 460% RETURN ON YOUR MONEY!!! It is hard to find a better return than that.
Change your Exemptions at your job. Exemptions and Dependents are NOT THE SAME THING! The same person who is getting a $600 tax refund is earning No interest from the Government. However, he or she could save $2-3,000 in interest on that same money!! This is how the middle class person gets AHEAD by USING HIS/HER MONEY CORRECTLY.
Try and make it so your tax refund is not more than a couple hundred dollars at the most.
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Steve Hoven, has many years of experience in personal finance. He has started a Newsletter on finance and is offering the 1st issue FREE. Check it out at
http://www.biz4christians.com
