Tax return season

For all Americans this is tax season.  However, most Americans will have over withheld their federal income taxes.  We won’t dive into why overpaying is not a smart financial plan today but we will talk about what your plans are with this return.  If you are like a third of those who are getting a tax return you will be paying down your high interest credit card debt. This is good right? Wrong.

Emergency Fund  Before you spend or invest a dime of your tax return do something different and create a $1000 emergency fund. This fund will allow you to stop using your credit card so that you can actually pay it off.

Budget  Make sure you have a plan aka. budget before you pay down anything.  The idea of a budget is that by having one you will not have debt next year and your return (if you have one) will be used for a more productive opportunity.

Debt Reduction Plan  Let’s keep it simple Check out this video Debt Snowball