Tax Refund Money Decisions | ADHD-Friendly Debt Payoff Strategies | 105

0:00 There is a very specific kind of excitement that happens when you know that your tax return has set your bank account right. So that's an exciting time to log into our bank account and see that that money has has hit our account. You, I feel like you have some breathing room and your brain goes, yes, it's time. So then you're those Pinterest ideas pop up and then your Amazon cart fills up. Maybe you are thinking about some new patio furniture, maybe a weekend trip, or you're telling yourself, maybe we deserve this.

0:32 Then that internal debate because part of you says we work hard, we should enjoy this. But then the other part of you might be saying we could knock out a credit card or we could finally build that emergency fund. Or we could just get ahead and this is the fork in the road because once you start that spending, the momentum shifts quickly. Hey there, I'm Jules the budget nerd and welcome to the Debt Rebel will show. This is the place where working families like yours learn how to stop living paycheck to paycheck, crush debt for good, and build a life where money actually works for your family.

1:06 In about 15 minutes, I'll share practical family budgeting tips, tough love strategies, and actionable steps to move toward debt free living without the fluff, the shame, or the confusion. And I know a thing or two about this. My family and I have eliminated over $107,000 in consumer debt, and that was after I got my degree in economics. So stay tuned. This is going to be a great episode. So grab that coffee, your planner, whatever you need to make this a great experience. Maybe a snack. If you're like me and let's make your money work for your family.

1:41 Why do our tax returns disappear so easily? Here's the here's the thing I usually see. We wait for the refund. We talk about being smart with it because we want to be right, but we don't actually decide when it hits the emotion. We, we respond out of that emotion and that's what makes that first move. After that emotion, then that's when our logic kicks in and we try to justify because we are our own best salespeople, right? We can justify anything. And I am including myself in that. So that's why I wanted to create this episode because one decision is bigger than 10 impulsive ones.

2:20 Some common mistakes that I can see people with tax refunds that we I want to bring to your attention so that you can avoid these. It's spending. One of them is spending before you decide, like I said, that refund hits you celebrate, you swipe and then you think about what you could have done with that money, right? Some money that could be used to create some momentum about, you know, maybe chipping away at some of those debts, but that opportunity window has closed because we've already spent that money.

2:48 The other thing that can happen is we want to splurge, right? We don't want to be anti fun. And that's definitely not what I'm about. I I think it's, we should enjoy spending our money again, but refunds often become the emotional relief spending plan. So we maybe it's been a stressful year and we feel like, you know what, we deserve something. And so that relief can feel it's temporary because here's what happens. That temporary relief spending rarely fixes our long term stress. So three months later, the same debt is still going to be there, only the tax refund is gone.

3:28 And you don't have that to give yourself some of that margin. Maybe you're spreading it too thin. This is something that I see a lot that we, we feel like we're being responsible, but it's also killing our our momentum. So maybe you put $200 on one thing, $150 on another, $300 towards this card and a little towards savings and nothing actually moves. So no account is a fully funded, no debt has been eliminated and those big psychological wins that we're looking for, those aren't happening. So it feels like it could be productive, but it's not changing the trajectory of our financial future.

4:07 So because our refund was bigger than I expected, I was thinking about all the things that it could cover, could cover a vacation or a home, a home project. And then there's the list of things that I'm like just waiting for extra money to buy and then you can. And then I felt that pull. But we decided ahead of time what was going to happen. We wanted to put a lump sum payment down on our debt. We definitely wanted to take a vacation and do all those other things, but I will say that putting that lump sum payment down was unsettling.

4:39 It was uncomfortable because that was a lot of money that was leaving our account and going through that whole thought process, just like I'm sure you have or you will, is what if we need that? What if something happens and then the balance, but then a shift happens because when that debt balance goes down, it's like such a celebration moment because the momentum shifts. That emotional boost of watching that big chunk just knock out one of those debts is so much motivation to and that's where you can use your refund strategically.

5:15 So let me let me paint a little picture for you two different scenarios. So story 1 is the emotional spend. So family gets a $4000 refund, they upgrade the couch, they take a short trip, and then they pay a few small bills and three months later the credit card balances are still there, the emergency fund is still thin, and that stress returns. Only now they were had regret on top of that, not because they're responsible, but because they didn't decide intentionally. So another family gets same $4000 refund, but they decide to put $1000 or $2000 into an emergency fund and then use the balance to wipe out one credit card completely.

5:59 So immediately they have breathing room, they have one less payment to make, and they have a sense of control instead of feeling that pressure. The same amount of money, different income, right? But the big difference is there. They decided before the emotion hit. So let's talk about practical strategy. Though. If your goal is to pay off your debt, here's the strongest options for you is to fully fund that emergency fund. First off, $1000 or more is the is the best place to start because nothing will derail your debt payoff faster than unexpected expenses.

6:37 So a small emergency fund is going to protect that progress. It's going to give you some stability first and then be able to accelerate that debt payment, that debt payoff. All right. The other option is putting a lump sum on your highest priority debt. Now maybe you have a buffer already and you're ready to make a bold move. Now, if you're doing the debt snowball, I highly encourage you to put it on that smallest debt and don't scatter it around right. Knock that out. And if you have enough to move through a couple of debts because your refund is big enough, that is going to not only create a huge dent in your debt payoff amount, but it is going to give you the psychological benefit that's bigger than any math problem.

7:24 It's going to allow you to move to that debt free day faster. So option 3 is to split it up strategically. So maybe you don't have that emergency fund fully funded yet. That's that small emergency fund. Then put some of that money towards that and then put the rest towards that first debt, the thing that's going to create that first momentum for you. So we're not trying to split this in 10 different directions. You're going to take 2 clear moves. Make it simple, clean and powerful for yourself. So you might be asking, all right, Jules, what?

7:55 How do I decide what is right for me? So there's three questions I want you to answer for yourself very honestly. The first one is, are we stable? So if something happened with your car or you had to take a child to the emergency room tomorrow, would you have to put it on a credit card? If you would start with that buffer, whether that's $1000, that's usually what I recommend. That's what our family did is start out with $1000 and that is going to give you some more confidence to move through the next process, through the next step.

8:23 Now the next question, do we have a basic emergency fund? All right, if you don't, like I said, this will be your first priority because debt payoff without that is like walking a tightrope in the wind. You're going to fall off guaranteed. It's one of the most common mistakes that I see. And then the third question that I want you to be really honest about with yourself about is what gives you the most momentum. So the answer to this question matters a lot. So would wiping out one account energize you?

8:55 Maybe seeing your emergency fund funded, would that help? Choosing a move that reduces the stress and increases your clarity is going to be the best move for you. Clarity is what is going to build consistency. And here's what I want you to remember. One decision is far more powerful than 10 impulsive decisions. Your refund is not random money. That is a decision point and it's a fork in the road. This is where you can lower your stress, eliminate a payment, and simplify your life. Build that buffer so you're not having to go to your credit cards for day-to-day spending.

9:30 And then you can change the trajectory of your financial future. Or you can decide to let it disappear, not dramatically, but quietly and fast. Your tax return is that decision point. You can let it disappear, or you can use it to change your financial future for you and your family. So if you want help deciding exactly where to go based on your real numbers, real debt, and real goals, I want to invite you to the membership this week. Inside, we map out everything together so there's no guessing, no emotional spending spirals, no regret three months later, and a clear plan.

10:04 Because momentum isn't accidental. We decide that and this is your moment to decide. So I'll put that information in the show notes for you and I would love to see you inside the membership. See you in the next episode. Thank you for tuning into the Debt Rebel show today. Ready to take your family budgeting to the next level? Stop that paycheck to paycheck grind and start living debt free? Head over to my website, debtrebelpodcast.com. That's DEBTREBEL podcast.com to grab resources, tools and tips to make it happen.

10:41 And don't forget, subscribe, leave a review. And if you know another family that will love hearing today's episode, it would be such a gift for both of us, your friend and me. If you share this episode and remember your debt free life starts with one brave step and I'm cheering you on every step of the way. We'll talk soon. That rebel?