Free up Money for Debt Payments (or anything else for that matter)

[cjscully]

Do you average more than a couple hundred dollars a year in tax refunds?

If you do, you are overpaying your taxes during the year. When you have too much withheld from your paychecks you are giving the government an interest free loan from every check. This is money that you could use to pay down debt.

There are a number of ways to figure out how much should be withheld from your checks. The most popular financial software programs (Quicken, Microsoft Money) have withholding calculators built into them. I personally recommend the method that anyone with an Internet connection can use, the withholding calculator on the IRS website.

Follow the instructions all the way through to changing your W4 with your employer.

When the extra money starts showing up in your paycheck, use it for extra debt payments!

[SimplySaving]

This is a great tip! My husband was always one of those people who loved to get a huge tax refund and blow it on something stupid. I FINALLY convinced him this past year of how stupid it was to let the government gain interest on OUR money. We have put the extra money from each paycheck towards building up our emergency fund. It is such a relief!

[jpg7n16]

For anyone interested in how to figure out what the right number of withholdings is for you, here's the IRS.gov site withholding calculator:

IRS Withholding Calculator

[savelikedave]

Definitely, why loan the government money that they won't pay you interest on. Thats basically what we do when we get a big refund. They take enough in taxes