Tax time

Tax time - the one time every year I am happy about how little we make on our one-income student lifestyle, because it usually means a nice refund.

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I did our taxes over the weekend, which was a huge relief - both to be done with them, and to know our bank account is going to be a little bit fatter soon. I never know what to do with our tax refund. It is money we earned after all, not a generous gift, so I feel guilty being too indulgent when our income often leaves us feeling a step behind financially.

There is the really responsible decision - pay off some of our student loans, and feed back into our emergency savings.

But Europe is always calling for another trip. We both have airline mileage sitting in our accounts waiting to take us to a far away country.

And the reality is that most years I just deposit the refund in our checking account and it mysteriously disappears, the way money does over a period of a few months. Immediate indulgences on a few new clothing items or dinners out usually win out to any long term planning.

This year, whatever we decided to spend our refund on, I wanted to be really intentional about it for the long term. So here is my plan:
40%: student loans
20%: emergency savings
20%: travel savings
10%: split in our peach money funds (i.e. discretionary income)
10%: Offering to our church

How do you guys decide where to spend your tax refund? Do you plan, or not?

Perspective

Last night my MIL and I went to Costco to stock up for Thanksgiving and my family's visit and

E asked me to get our tires rotated--only to find out they needed replacing.

This is just another expense in a growing pile of them. We've spent about $800 on car repair in the last six months, and I got a ticket for coasting through a stop sign (UGH).

Money is becoming far more stressful than I imagined it being. I planned for some car repair, but not that much. We have an emergency fund, but it's pretty modest. It's so frustrating to take one step forward and one step back. It seems like every small financial victory is followed by defeat.

But last night, E put it all into perspective for me with one simple reminder.

We have more than we need--we can always survive on less than what we do now.

And what good does it do to worry and stress? Tomorrow money might be the least of our concerns.

Money Honey

In our house, I manage the finances: the day-to-day bookkeeping, bills, budgets, etc.

This works out well for the both of us, because I married an academically-minded guy who hates nothing more than thinking and worrying about money.

We generally have two types of conversations about money:

E: Can I go out to lunch today?

Me: Ok, but you have a total of $30 left for fast food this month

E: Awwww....

Me: and don't forget to bring me the receipt

...............

Me: honey, what is this $37 Amazon charge on our credit card?

E: (sheepish grin) ummmm, ok. don't get mad, but I needed a couple of books.

(he spends more money on books that on anything else)

Me: *rolls eyes* this means I get to buy a new pair of shoes

We covered "money" as a topic in our pre-marital counseling, but I certainly had no idea how challenging it could be for two people to manage a shared income with completely different priorities on how it should be spent.

I'm definitely the more spendy of the two of us. I like to make continual small purchases(online shopping...ugh!), and E usually likes to have the best of the big purchases (an HDTV we bought after Christmas...and the MAC he is dying to have once his computer konks out)

We're getting a little better at planning and spending with a tiny discretionary income, but in general we've done a poor job at sticking to our budget--particularly for food and clothes. I blame this partly on the fact that we created our budget before marriage, and it needs some updating. But I also think it can be traced back to the fact that I grew up thinking I was poor, because I have parents who were thrifty to the extreme, and almost never bought anything brand new, and often sacrificed quality for savings.

In college when I met E, I started to search for a balance--learning that spending wisely sometimes (often) meant spending more.

After a couple years, I also have learned we need some self-control. Despite our small income in Southern California, I know we can and should be living on less, paying off loans and saving--at least for emergencies. We pay our credit card bill in full every month, so our only debt is student loans, but there are months when I have to draw out of savings, and it kills me.

I recently started following this blog, written by 3 wives (a mother and 2 daughters) with helpful, every-day, money-saving tips

http://frugalwifewealthylife.blogspot.com/

I was really motivated by the debt recovery progress of Katie & Ryan on Bless This Nest

http://hagensnest.blogspot.com/search/label/debt

It's taken me a while to think less selfishly about money, and make some sacrifices, but I hope to much more diligent about our spending in our second year of marriage.

Who handles the money in your family? Do you follow any other great money-saving blogs? (please share!)

ps. www.mint.com is a great resource for managing your accounts, bill payments, budget and savings/debt goals. Best of all...it's free!

Money in the bank

In an effort to begin the transition from wedding blogging (which will always be a big part of this site!) and sharing some of our newlywed life--today is a newlywed post.

The other day I asked my hubby to deposit his meager internship check at the bank ASAP, since we live paycheck-to-paycheck [that's what one non-profit income and graduate school in Southern California does to ya].

When he came back and dumped the receipt on my desk I gasped in amazement. Our account balance had tripled! Overnight!

After coming to my senses at our good fortune I suddenly realized that the week of late nights with statements and W4s and 1040s in February had come full circle and we'd gotten our tax refund. But I couldn't make up the difference in my head....the refund was still almost double what I had anticipated.

A little bit of research led me to the discovery that we qualified for the Making Work Pay tax credit, which essentially refunded us $400 each in fica taxes.

If you're really interested, here's how the IRS explains Schedule M.

If you are vaguely interested and don't understand the IRS, here's an MSN money simpler explanation.

Alls I know is we got a bigger tax return that I planned on, and we aren't complaining!

I'm currently working on a spreadsheet to divvy up the cash responsibly.

I'll share our final decision on how we plan to spend the money using percentages.

I have to say, I actually enjoyed filing my taxes [mostly*] on my own this year. It was interesting to gather all the information and see how and where our money went and how the system works--although I can totally understand that for people with more money/more complicated situations, taxes can be a stressful time. But for us broke newlyweds, it was really pretty simple!

*I said mostly because I still consulted my dad by phone on a couple of confusing section on my taxes. He has done them for me since I've been working, and is a CPA!

Were you pleasantly surprised with your tax return this year? Do you dread tax season and suffer through it, or hire it out to avoid the pain?

the money stuff $$

I redesigned my blog a little big using a 3 column template from here, and I'm so happy I did!

It allowed me to add the budget feature I've been thinking about lately, which I orginally saw on That [Engaged] Girl's blog

I was struggling with how much personal information I wanted to share with the blogging world, but hey, it's just money, right? I'm not the slightest bit embarassed about how much we're spending, because it's the perfect amount for us. We cut the guest list by about 40 to make it happen, but we're spending less than half of what the average wedding costs in my area (around $27K).

We're contributing some, and my parents are chipping in most of the rest. I decided we needed to contribute a little to make our wedding exactly what we wanted. The budget does not include the costs of the reception that we are having in California the month after the wedding, as E's parents are paying for that entirely and I'm not responsible for the budget!

I'm also not SO set on this budget that if we go over, it'll break the bank. It's a realistic goal, I think. The more $ we save, though, the more gelato we get in Italy!! yum.

Check it out, and if you feel like it, share your wedding budget!

I'm sure I'll be posting a lot more about the budget and ways to save money in the future.