Well it is that time of year again. Super Bowl? No tax season. Of course it is Super Bowl season this weekend as well but that is not why we are here.
Every year at this time, tax accountants' offices are crowded with people dropping off their taxes, meeting with their accountant, or picking up their completed return. As a son of a prominent certified public accountant, growing up I knew I would not see my dad much from the time of the Super Bowl until a week or two into baseball season. It wasn't until I entered the workforce in the financial education field that I realized how much people enjoy getting a "refund" from the IRS. People planned trips to Disney or purchased new cars as soon as that check came in the mail or hit their bank account. What most people fail to realize is that when you receive money back after you file your tax return, that you actually over paid taxes and basically "loaned" the government your money without charging them interest.
Think about this. If your refund is $5,000, for most people that is about $192 per paycheck. If you took that money and paid down high interest debt, you would have been able to reduce your balances and pay it off quicker. Just look, a $5,000 balance credit card at 16% interest will be paid off in 12 years if only the minimum balance is paid. If you added just an extra $100 per month, your debt would be paid off in a little over a year and a half! That is a difference of 11 years and over $1700 in interest saved.
So starting today, you will have about $285 per month extra in your pocket, then in one year and 7 months you will have another $200 extra since you no longer have a debt payment. Wouldn't you rather use the money during the year than let the government borrow it? Of course.
There is no better time to make that change then now. Call us to set up a financial education meeting free of charge and find out what other decisions you should make to maximize your financial potential!
Anthony J. Mascherino, Jr.
ACTA Financial
Thrive Financial Services
484-206-4200
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