Allocationg Our 2013 Tax Refund

We got our tax refund information a couple of weeks back.  I spent some time coming up with some proposed allocations, and my wife was more than happy with what I came up with, so I thought I’d give a brief rundown on the categories which we’re allocating this year.

The Three Sources of Our Refund

We get our refund from three different sources

  • Federal Refund – Self-explanatory
  • State Refund – Again, shouldn’t require any detail
  • Side Income Allocation – When we make money from our side hustles, the sales of stock, the cashing in of savings bonds, or other areas where I know we’ll pay taxes but there is no withholding, we set aside 25% in an earmarked fund within our money market accounts.  If we were ever in a position to have to pay estimated taxes, this would be the source, but for now, it’s a nice way to get a ‘refund’….and earn interest on it along the way!

So, here are the categories for which we are distributing the money this year:

  • New Car – Eventually we’ll get a new car (new to us, anyways), so we stick a few hundred bucks toward that
  • Car / Camper Repairs – I like to have $1,000 set aside to cover any repairs.  My car needed about $1,300 in repairs last year, and I project that we need new tires on our camper this year, so we’re putting a few hundred bucks into this to bring it close to ‘fully’ funded.
  • Roof Payback – As I alluded to above, our money market fund is broken down (via a spreadsheet) into multiple allocations.  One of those was the roof that we got installed last year.  As it cost about $2,000 more than I’d budgeted, we essentially ran a negative balance, which is fine because there are always other funds running positive balances.  We are about $600 away from fully paying that off, so we’ll do so with a portion of our refund.
  • General Home Fund – Everything for the ‘around the house’ fund went to re-stock the roof fund, so not only do I want to bring the balance to $0, but start adding money to it so we can do improvements or start saving toward whatever major project comes next (hopefully in a few years)
  • New Mantel – Normally, I don’t get very specific, but this year, I decided to get somewhat detailed. My wife has been asking to have a mantel installed above our fireplace since we moved in.  Now that it’s been seven years, I figure I can’t use the ‘maybe next year’ brush-off too much longer, so I’m specifically putting aside a small sum toward this.
  • Kids Rooms – Our youngest will be ready to move into a big girl room, and we’re looking at doing some re-shuffling of rooms.  This would require painting three rooms, new bedding, some new draperies and the like.  I am setting aside several hundred dollars to help offset this work.
  • Preschool – Our oldest will be heading to kindergarten this fall, but our youngest will have two years.  We’ll set aside a few hundred bucks to cover the cost of preschool.mb-201403stacks
  • Kids Activities – This is the one that sold my wife.  As our kids are getting older, they are getting more interested in things that have costs associated (e.g. T-ball for my son, swimming lessons for both, dance lessons for my daughter), and rather then complain about the costs each time one of these comes up, I wanted to set some money aside.
  • Gifts – We fund our Christmas fund, and also a ‘Month of May’ fund throughout the year so that when the gift needs arise (May has multiple birthdays and Mother’s Day, so I started saving for this a few years ago to spread out the cost), it’s already paid for.  Just a token amount to each fund.
  • Maintenance – Just last week, I referenced a few items that would need some routine work done this year.  $100 each toward getting the snowblower, lawn mower, and HVAC system looked at will help cover these costs.
  • Anniversary Trip – My wife and I try to take a small in-state trip for our anniversary every two years, and I set aside a couple hundred dollars to cover some of the costs.
  • Fun Money – My wife and I each get a little bit of money to spend as we want.  With kids at the age of 4 and 2, I expect that it won’t be long before we have to throw a little bit their way, huh?

So, there you have it.  As you can see, it’s nothing exciting, but it all helps to fund expenses that we have that I don’t really include in our monthly budget.

What are you doing with your refund check(s) this year?

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12 thoughts on “Allocationg Our 2013 Tax Refund

  1. It’s great you have set out a plan for your money like this. I know so many people who fritter it away.

  2. Sadly there is no refund for us this year. We had to pay in because we made too much money. Of course, I’m not complaining about this, as paying in simply means we were more successful than we planned for the year. But this year we will be making some adjustments to our withholdings so that we don’t have to pay in as much.

  3. Getting big lump sum amounts of money is has the risk of spending it without really getting much from it. I know in the past I’ll spend a little here, a little there thinking I’m not making a dent in the large amount. Before I know it, it’s almost gone. Mapping out what you’re going to do with it certainly will help it getting the most value, and the most benefit from that tax refund. Love your “Month of May” fund….I need that for the the end of June/ early of July when my wife’s birthday and our Anniversary fall within a week of each other.

    • That’s pretty much the same principle…my wife’s birthday and my son’s birthday are four days apart…there’s Mother’s Day right in there, and added all together it just got too stressful to absorb into the monthly budget. Throwing 25-30 bucks per month definitely takes the burden off when it comes time to start getting things lined up.

  4. We haven’t done our taxes yet as my wife (a CPA herself) is too busy. We file an extension and will be done in May. Our refunds will go towards a new car purchase later this year and summer vacation/kid activities.

  5. I got my tax refunds a couple of weeks ago. I kept about 20% to replenish my vacation savings account, and the rest of it went as a lump sum on the principal of my mortgage. I figure, the reason I’m getting a big refund these days is entirely due to the mortgage interest deduction, so I should use a good chunk of it to put toward the mortgage itself 🙂

  6. Looks like your refund is going to fund a bunch of different things, that’s great! I don’t get too excited around tax time. I usually owe, but that’s because of the way I have deductions withheld and how we itemize things. I guess I can look at it as saving money throughout the year, but owing on the back end.

  7. Nice plan! We’re doing our taxes this Sunday, so I don’t know if we are getting a significant refund or not. My guess is that we’ll have $3000-ish extra. If that’s the case, it will go mainly to funding this year’s Roth IRA’s (still have about $6500 to go) and like 10% to the vacation and fun money accounts.

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