Robbing Peter to Pay Paul

Most people look forward to tax season and have a list of items they wish to purchase once they receive their tax return...go to Best Buy and you'll see big screen tvs flying off the shelves while new cars are driving themselves out of the dealership parking lots. Oh, the joy of getting a fat check back from the government!!!

Unfortunately, I'm not one of those lucky people who get money BACK from Uncle Sam...every year I end up paying in to both the federal and state government. In fact, my first year out of school I owed almost $2,000! I had walked into the tax place with my mental Wish List and had to be pried off the floor when I was told I had to pay in...Convinced that they screwed up my taxes, I called both my jobs and sure enough--the tax people were right! At the time, I was only making $11/hr so it was beyond stressful to save enough money between Feb & March to pay off my debt...

I've since figured out the appropriate amount of withholdings to claim each month from my CASA paycheck...however, my second job with the Crisis Center always throws me into a higher tax bracket. My income with them is in the 5% tax range (obviously, they don't pay very much!) but add that to a full-time salary and the numbers go from green to red. Needless to say, I've learned to get my taxes done as early as possible so that I know how much I'll pay Uncle Sam on April 15. If you watch real closely, you'll notice all my unnecessary spending completely stops during this time as it allows me to swallow a bit easier when I write that check!

I ALMOST hesitated to file my taxes until after we close on our house next month--at least that way I would only have to pay into the state as the first-time home buyer rebate from the federal gov't would take care of what I had to pay into them...but then I realized that it no different than robbing Peter to pay Paul!

As many people are aware, the rebate for first-time home owners is no more than $8,000. I think this is the first time in my life that I will ever get a check from the government! Wait, I'm wrong--I did get that stimulus check from Bush but that money was put towards my deductible to repair the hail damage my car got during the same week I received the stimulus check. Talk about rotten luck...

Honestly, I have no idea what it would be like to receive a check of a significant amount from the government. A few weeks ago, I had a list of FABULOUS home furnishings and upgrades that I was going to pay for with the rebate money...but then my better sense kicked in. Sometimes I like to blame Mom & Dad for ruining the fun because they were the ones who taught me about money management!!! It's MUCH more exhilerating to blow money than to suffer along and save up for stuff--but in the long run, why finance something only to pay more in the end? Did you know that if a person finances a house for 30 years, stays in it the entire time and NEVER pays more than their monthly payment, they actually pay TWICE the amount of the home's value? Thus, you will pay $200,000 for a $100,00 house.

This whole world of credit & loans amazes me. When I went to finalize my home loan, I had an awesome credit score but I didn't have "enough" loans under my name--for a FHA loan, a person needs a minimum of 4 lines of credit. As I have no credit cards or store financing, the bank was a little surprised! And I was surprised about how a govt backed loan intended for young homeowners would require a minimum of 4 debts--it's almost like they want you to shoot yourself in the foot.

To wrap things up, Justin and I have found our living room set for our new home (did I mention we're getting custom pieces?!). The furniture store was really pushing us to finance the couch & chair, but why??? The more you sit on furniture, the more it depreciates...last time I checked, Flexsteel furniture wasn't made outta gold. Paying someone else extra money to sit on MY couch makes no sense. We have already started our "furniture envelope" and will go pick up our items once that envelope is full. Justin & I decided that if Uncle Sam is going to throw us $8K that we're better off to pay what's left on our car loans and save the remaining balance. As much fun as it'd be to blow the money on making the house look good, at least we'll save money by preventing future interest payments on our cars and then we can use the money we save to pimp our pad!