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    Tax Returns!

    So yesterday I found out im getting 2000 dollars back for my tax returns ( I know I filed them very late). I was very surprised cause im used to only getting around 400 dollars and I was expecting around that amount too. This is my situation:

    Checking account: 150$
    Visa: 0$
    Savings Account: 1100$
    Student Loans: -3300$ 3.5% interest, 50/month payment

    Now my mother told me I should put it in my savings account since I want to buy a car soon, and she said that since my student loan has a low interest rate it might be better for me to save the money.

    I know most of you are anti-debt so most of you will say to throw it at the loan, but would it be bad if maybe I split it half/half? And is a loan with 3.5 interest really bad to just pay monthly?

    Thanks!

    #2
    We need more info. How much do you earn? What are your monthly expenses?

    You say you want to buy a car soon? Do you have a car now? Is there a reason it needs to be replaced? Or if you don't have a car, is there a reason you need to buy one at this point? How much do you expect to spend for the car?

    You have $1,250 in savings which is a decent starter emergency fund. The question of what to do next really depends on the big picture, including the answers to the questions I've posed.
    Steve

    * Despite the high cost of living, it remains very popular.
    * Why should I pay for my daughter's education when she already knows everything?
    * There are no shortcuts to anywhere worth going.

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      #3
      I'd personally rather save up some cash than pay off that 3.5% loan. & I run pretty conservative when it comes to debt. But the point is that if you have no cash, it is way too easy to end up in worse debt.

      For good and relevant advice, I agree with Steve - would need more info.

      Comment


        #4
        Are you living with your mother? Are your monthly expenses lower than your income? Many here have a set priority for new income. It would not hurt for you to establish a priority list and allocate your income accordingly.

        Comment


          #5
          Also...at year end your payslip likely gives sufficient details to allow you to at least run the figures to check potential tax refund. Anyone anticipating a refund needs to file by March 1 since T4 & T3 should be issued by the end of February. You're giving our government an interest free loan while you would be charged penalty plus interest had you owed anything. Should you owe tax 2013 you can file before April 30th but pay electronically April 29, 2013.

          Comment


            #6
            I am 21 years old and I live at home with my mother! I plan on living here until im done university (In 4 years). Im going into sociology since im not sure what I want to do.. So im not sure if im going to have a huge income when im older. ( Ps. im never getting a student loan again!)

            I only make around 1000 dollars a month but my monthly expenses are 250. I had previously asked in another post what I should do with my extra money and I have made a brief budget:

            250 --> bills ( cellphone, buspass, loan)
            400 --> savings ( all into my tax-free-savings-account)
            350 --> going out/ eating/ clothing etc.

            For the car, I do not have one. But I am getting to the age where I need one to get around. I do not want anything fancy, just something to get me to point A to point B. Maybe like 3000$? I would like one by next year.

            So what should i do with the extra 2000!? Thanks again!

            Comment


              #7
              Based on $1k per month, with $250 going to bills (nice of your mum to not charge more!), I would do this:

              $2,000 into savings (FOR NOW)
              $500 into savings (For 3 more months)
              $250 for going out, eating, clothing, whatever

              IN three months, pay off the student loan (if you are sure you won't need another one)...

              THEN, keep doing $500 into savings for another 9 months and in one year from now, you can get a $4-5k car that will last you for several years.

              So yes, you have to lower your expenses for "fun money" a bit, but that's still over $60 a week!!

              Hope that helps.

              Comment


                #8
                Originally posted by Ambitious_Andrea View Post
                So yesterday I found out im getting 2000 dollars back for my tax returns ( I know I filed them very late). I was very surprised cause im used to only getting around 400 dollars and I was expecting around that amount too. This is my situation:

                Checking account: 150$
                Visa: 0$
                Savings Account: 1100$
                Student Loans: -3300$ 3.5% interest, 50/month payment

                Now my mother told me I should put it in my savings account since I want to buy a car soon, and she said that since my student loan has a low interest rate it might be better for me to save the money.

                I know most of you are anti-debt so most of you will say to throw it at the loan, but would it be bad if maybe I split it half/half? And is a loan with 3.5 interest really bad to just pay monthly?

                Thanks!
                I'd probably save it. You need more cash. Having only $1100 could get you into a bind and force you to use your Visa card should something come up.
                Brian

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