My Federal Tax Refund was Direct Deposited Today!

As another workweek ends, there have been several financial developments. First, my federal tax refund already has come via direct deposit, about two and a half weeks after submitting it. The amount was pretty significant and I am almost ashamed to admit how much it was becuase I don't feel like hearing people go on about how I am giving Uncle Sam an interest free loan. I enjoy getting a big refund. Because my wife and I are teachers we need a sizable amount of money for the summer (even with me teaching summer school). The refund is a great way to take a chunk of cash around mid-March, drop it in Emigrant for a few months, and have money to pay bills when August comes around.

This year our refund is even more outrageous than usual. The federal came out to be $7260, while the State (not gotten yet) will be around $600. Why so much? Well, to begin with, I haven't contacted my Payroll department since I was hired to alter my allowances. According to them, I am still single and childless. Having our second child right at the end of 2006 was a nice financial move, just from the child tax credit standpoint. In New York, property and school taxes are off the charts, so that's a big deduction, along with our mortgage and student loan interest. Add in a pretty big donation of clothes and furniture to Salvation Army, contributions to our 529, and $500 in educator tax relief, and you have a fair amount of deductions. Our credits helped a lot as well. Besides the two kids, we had energy efficient windows put in ($200), purchased a new central air conditioning unit ($300), and my wife qualified for the Lifetime Learning Credit ($1000). Many of these credits and deductions are applicable only to this year unfortunately so I won't expect this same amount next year, but $5K+ should be well within reach.

In the past I've used some of the refund for funding our Roth accounts or contributing to our stock. But since both Roths are pretty close to being fully funded for 2006, it's probably wiser to pay down some of our 0% debt, especially since some of the debt and our refund are directly related.

Most of our $18000 in credit card debt came just over the past 12 months. November 2005 saw us having to replace our furnace (the house couldn't heat past 58; I could take it but we had a 6 month old and my wife threatened to move out). That was $2600 and what makes me more upset is that I couldn't take the new furnace as a deduction since only furnaces purchased and paid for in 2006 are eligible. The year 2006 started with us having to replace some windows that were falling apart (our house was built in 1911 and a lot of the windows are originals). $3600 later and two rooms upstairs (including the baby's of course) and one big window downstairs were finished. I then did a pretty foolish thing. After completing my first Application O Rama (AOR), Balance Transfer game, or whatever you want to call it (more on this later), I had close to $80K sitting in my savings account earning 5%. I got excited, took out $4K and funded my Roth for 2005. I shouldn't have done it, I know, but at least that $4K will grow to much more after all is said and done, and I will only have to pay $4K back and no more due to 0% interest.

So with the running total at $10200, my wife had to finish her Master's in 2006. Most of her tuition is being handled by loans. However, on two occasions, she took only one class and we had to pay out of pocket. The ridiculously overpriced and hated vampires at Nazareth College in Rochester sucked $3600 from us, the sum for two graduate level 3 credit courses The good news - my wife has her Master's and is being paid more by her employer, and I was able to put the tuition on our Discover and earn 5% cash back during a promotion they carried last year. The bad news - our debt shot up to $13800. Summer saw our air conditioning crap out ($1700) and a couple smaller, but necessary purchases - $700 for two really nice twin beds for the girls and $600 for a dresser with a mirror for our bedroom (it was about time we had some adult furniture). That pretty much takes us to $17K, and it's only been the extra income from interest on a large sum of 0% money that we aren't further in debt.

Hopefully, we can get through 2007 without as many financial headaches although the rest of the windows will eventually need replacing and the roof is looking its age.