Monday 125: Tax Season Reflections – A Year in Review

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Monday, 13 February 2017

Nothing like looking at what you made in money, and what you have to show for it.  The tax season doesn’t lie – unless you do, or your accountant does, or your employer.  My advice:  Don’t do it!

Frankly, I am appalled at how much money we make, and how much we owe.  A few years ago, our accountant said, “You should be living ‘the good life’ with your income.”  It sunk in.

We sold the rental, and in January of last year, we started the debt snowball.  

And then bought a car when the Subaru blew up one time too many.  We bought car payments.  And now we have student loan payments for The Student.  We are still up to our ears, but if all goes to plan, the credit cards will be paid off by May 2019.  It’s a hell of a lot of money, some at more than usurious rates.  And, that day seems like a long, long way off.  A part of me wants to cash out some stocks to bring down some debt, but with our income it may not be advisable – I am not sure what the line in the sand would be in percentage of taxes paid next year; we are already in a very high tax bracket.

We meet with our accountant this coming Friday.  I will talk to him about his thoughts on using stocks to pay down debt.  Being the type of person who doesn’t like financial surprises, we have been saving for potential taxes as well as known taxes.  There is money in the bank should we need it – more than there was this time last year.   The really cool thing is that as we slowly learn about finances – how to handle them, how to talk about them, how to plan for them – we are making progress that is of more value than the money itself.  To me, this is the biggest blessing of taking the plunge into the debt snowball.  We are not rigid – we have had to adapt – but right now, we can handle most emergencies!!  

A year ago, we could, sort of.  Rather than discuss things, we would argue about things.  Mr. 182 would sigh about the lack of money, but not think about how to save it.  He went along with the program and resented it, and while not obviously unhappy with it, a wrong word here or there, and resentments on both sides would flare.  While still not perfectly in tune with each other, we are more in coordination with our money.  The fact that money is now more of a topic of conversation off and on during the day, and a part of our conscious thinking, clears the way, and continues to clear the way, for productive usage of our money.

I am sure there are those who would tell me we should and could be doing a better job.  They are probably right.  We are working on doing better this year . . . no Amazon except as agreed upon, immediately paying for all items put on a credit card, cutting down of mobile phone costs, watching the food budget, funding the emergency and tax fund (we do not have an escrow account), and saving for known expenses.

We have paid off more than $10,000 in credit card debt while putting money in the bank, reducing everyday expenditures, and continuing to reduce other debt, even though we have added other bills.  The fact is some of our choices could possibly been different, but what we are doing now is working.  Changing 25 years of habits is work, but the change is occurring.

I could focus on what we aren’t doing, but prefer to see what we are accomplishing, have accomplished, and continue to accomplish as we change our financial habits.  It is this conscious awareness that helps us develop new strategies to cleaning up our past financial mistakes.

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