Hello Week 20 of Project Money! You know I think when Project Money ends in less than two and a half months, I am going to keep blogging. I’m not sure where I’m going to post these blogs, but there is something that is inherently healthy about writing, be it making a list, journaling, goal setting, or blogging. Writing makes us accountable and allows us to dialogue with ourselves and others as well. In the future, I hope I find a medium that allows me to have conversations with others be it a newspaper column, a radio talk show, a podcast, magazine article, webinar, or a blog. I want to keep learning and sharing.
Today’s topic is not one I’m very familiar with but I’ll give it a shot. It is tax withholdings. Working with my accountant recently, he suggested the possibility of changing my withholdings. Now there are advantages and disadvantages of this. I know for me, the most important factor is having enough withholdings so my taxes are paid for. I never want to have to pay in because I have miscalculated my withholdings. This is my number one priority.
With that said, I have always enjoyed getting a sizeable refund in the spring. In the past, I looked at it as a kind of savings account. However, now that I am creating new financial habits, it is more important for me to have “extra” money for living expenses and entertainment upfront. While going from a 30-year mortgage to a 12-year mortgage is surely exciting, it does make things a bit tighter. By changing my withholdings, I have a little extra money upfront to play with. For example, if you find yourself with high-interest credit card debt, this may be a helpful thing to look into. Once I get used to my two monthly mortgage payments instead of the one, I think I will funnel this extra money into my mutual fund accounts. I like having this money in my hands as I am not gathering any interest from the government and this way I do not have to wait for that refund check to come. I can spend it, save it, or invest it. Talk to your accountant and analyze your withholdings to see if this might be an option that interests you. Have a great week everyone.
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