Spending My 2020 Tax Refund

 My tax return was filed last week, and I am happy to report I'm receiving a federal refund of $857! What am I going to do with the money?

First, I'm going to cover the $160 I spent to pay the accountant.

Next, I'm going to take $140 for fun money. A proper office/gaming chair sounds good right now!

After that, I'm boosting my home down payment by $300. Note: this isn't an even split with my student loans, since my progress chart goes by $50 squares.

Finally, I will make an additional $257 payment on my student loans.

But what about my state refund of $9? I already spent that on a large soda and lottery tickets.

Tax Year 2020 Complications

I thought tax year 2020 would be the most complicated year to date for me.

I had a software snafu in tax year 2019. The software I used (which I won't name here) buried forms regarding marketplace health insurance coverage. Their logic was this: the penalty for not having coverage was removed, so they hid the form as a whole. Since I wasn't asked about my coverage, I never entered the information. So I ended up paying back the marketplace coverage I had and it delayed my remaining refund by six months (peak pandemic time and all).

Thanks to economic relief efforts, I've enjoyed 0% interest on my student loans for most of 2020. The interest I paid during the first few months of the year was not enough to warrant an official tax form, so I had to submit a letter instead. When I file my taxes next year, I assume this will be the same case.

This is also my first year with cryptocurrency. I started off with about $40 in Bitcoin in January of 2020 and by the end of the year my portfolio grew to about $200. When I made my account on Coinbase, I went through the lessons to earn other cryptocurrencies and made some exchanges to get the other coins for which Coinbase offered rewards. Two surprises came from this: Bitcoin is not my largest asset (the honor goes to Maker at roughly 20%) and I actually lost $59 on conversions.

Finally, I received stimulus checks in the last year. I did have to report the amounts of the checks to my tax professional, but I was well within the income limits to receive them.

I am receiving a refund this year, but I will write about how I plan on using it once the money materializes.

Doubling Down Financially

Welcome to my first post of 2021!

This year, I've taken on the theme of doubling down. This theme applies to many aspects of my life (weight loss, reading, etc.), but what does this mean for me financially?

First: Student loans. Once I get my three-month emergency fund locked, my loan payments will be 29% of my income.

Second: Home Down Payment. I saved about $2,500 in 2020, so I'm looking to match that in 2021.

Third: Filling My Big Pig. It's about half-way full already, so I can see completing it this year. That pig is going to be split four ways: food, exercise, dating, and most importantly the student loan.

Of course, it's early in the year, so any of these numbers is subject to change.

The 50-30-20 Budget

 One major rule I follow when making a budget is the 50-30-20 rule. 

• 50% of my net income goes to needs, i.e. food, gas, rent, aka the really important stuff. 
• 30% goes to wants, dining out, lottery, video games, etc. The moving fund is in this category.
• 20% goes to debt repayment and savings.

For debt repayment and savings, I assign percentages on a point system. The most important item gets two points, and everything else gets one.

For example, before I got my bonus, my most immediate debt was my credit cards (2 points). That was followed by my emergency fund (1 point) and my student loans (1 point). By this breakdown, 10% of my budget went to my credit cards, while 5% went to each of the other items.

Now as the items get paid off, the points shift down the list, and with less items, the percentages increase. Now the emergency fund (inching ever closer to three months) is two points, and the student loan payment is one point. By this breakdown, the emergency fund is 13% and the student loan is at 7%. 

There are some nuances to these percentages, especially when it comes to the moving fund and the student loans.  

Bonus Check Breakdown

I've been fortunate to have a job that allows me to continue working from home during the pandemic. I've been doubly fortunate that said job pays a bonus during this time of the year. In this post, I discuss how that check is going to use, without going into specific numbers.

First off, I'm using a fifth of my check for fun money. I plan on taking a fifth of the fifth for playing the lottery. After that, I'm planning on taking my family out for dinner. I'll keep some cash on me should I think of something else to do/get.

Next, I should have plenty to pay off both credit cards. The payments I already had set aside for them will instead go to my emergency fund.

From there, the remainder will be split into three categories: my emergency fund, my student loans, and my moving fund. The emergency fund will see a good boost from this bonus, in addition to the money previously marked for my credit cards. Paying extra on my student loans will help me push down the monthly payment needed to pay them off in the original ten years. And of course, I'm continuing to push toward my down payment goal. 

Reconciliation: Budget Vs. Bank Book

I recently recognized some discrepancies between my budget and bank book. At the time I wrote this strip, I had about 10 months worth of transactions to review. 

Like that time I took out $20? It was actually $100.

On my budget spreadsheet I split my transactions into separate categories. Say I spent $25 at the gas station. This would be broken down into $15 for gas, $5 for lottery, and $5 for groceries. I also have the "keep the change" feature on my account, so any non-exact dollar amount has to be rounded and the difference marked as savings.

There's also the big issue of windfalls, namely the $1,200 stimulus. I tried to keep it on a separate sheet to not mix it into my budget, but because it's in the same account, any untracked spending ends up reflecting on the bank book. I had to put the unspent amount into my budget to reconcile with the bank book. I hope to avoid a similar situation when I get my annual bonus.

Asking Parents For Money

Not asking my parents for money has been a point of pride for me. My mom has been setting a few dollars a side for me, and I figured saving for a house would be a good reason to ask for that money. The following is a paraphrasing of that ask.

Me: Hey, Mom. You know how you had that money set aside for me?

Mom: Yes, what about it?

Me: I was wondering if I could put it in my savings for a house.

Mom: Of course, if it's for that purpose, but don't expect anything else unless I will it!

Me: Wait... Do you mean if you choose to, or if you die?

Mom: Sips Tea Yes.