YIKES! The tax deadline is tomorrow!!! Good thing I did my taxes 2 months ago. CPAs around the country are getting time and a half today, as they have for the past month. My tax guy does so well he only works from Jan-April each year. He takes the rest of the year off.
Today I thought we’d have a little fun. I’ve gotten my tax refunds already. Nothing substantial because I didn’t make much last year (only a dollar back from the state!) but it was a nice round figure. Add to that an expected rebate from the feds that I’ll get to help ’stimulate’ the economy and I’ve got a few nickels to play with here. So what to do? This is where behavioral economics steps in. Logic demands that I use it to pay off extra debt on my car, but thats not fun.
We all do mental accounting and I’m no different. With 4 bank accounts, 2 retirement funds, 1 car loan, and a credit card, I’ve got a lot of buckets going in and out. Add to that each account is broken down further (checking to pay 5 bills, saving for 3 different things in a savings account) I get lost in a sea of digitized dollars (apologies for alliteration). To keep from blowing it all in one place, I decided to spread the wealth.
I gave a small chunk to my emergency fund. I’m already at about 3 months of real world expenses, but right now I save hundreds in rent each month. Since my living conditions will change to a more realistic (read: expensive) set up this year, I want to get up to 6 months of real world expenses. This was also a New Year’s Resolution. The next piece of the pie went to my Roth IRA. I’m in the process of rolling an old Roth into a new one with Vanguard with a fresh cash infusion I’ve been sitting on. An extra boost from the Fed’s will allow me to reach the minimum for another fund in the Roth. I’ll have more about this process in a post in a few weeks.
So I’ve got some left over. Most of it went to a slush fund. I want to buy an iPhone when the update happens this summer, and an ultra-portable laptop as mentioned in my new computer post. I saved $100 to add to my next car payment but just so I wouldn’t feel guilty about not paying down debt. I already make the equivalent of 2.8 payments each month, so accelerated payoff is an understatement.
I put a bit into each bucket because I am a victim of behavioral economics. The inspiration for the post came from an AOL Money article, so check it out. Then come back here and tell me what your plans are for your refund and rebate!
 By The Weakonomist |
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Your amount of buckets looks like mine…I think I have about 7 buckets total, eek.
Refund is definitely goin to CC debt, fun fun heh heh.