My Debt Blog

In the Land of Lincoln (Illinois) we pay our property taxes a year behind. The tax bill for 2007 came in back in May and has two payment due dates. The first installment is typically due at the start of June, and the second is due at the start of September. I have an escrow for my property taxes, which is basically an extra chunk of money I pay along with my mortgage payment to be set aside in an account to pay this bill. The first payment was made back in May, and the second payment will be made this month. As it turns out though when they recalculated my escrow account, I have actually overpaid my escrow. The bank sent me a refund check for overpayment.

In addition to this bit of positive news, because I have overpaid in the past, I have a new mortgage payment going forward. I will pay about $23 less per month that can go towards other things, this saves around $276 a year. This new payment will come effective next month as I have already paid my mortgage this month.

It’s been a concern of mine this month regarding running out of money before 8/15. After the bills get paid there was very little remaining for food and gas. Even though $140 doesn’t make a huge difference, it will make it easier. At the same time with the EF gone, I’m considering putting this $140 into the EF since it wasn’t something that we planned on having.

As sad as it sounds my stress level went way down after reading the mortgage paperwork and receiving this check. It might be psychological but I have a strong need to make sure my ducks are in a row or I get really stressed out. Another thing that reduces my stress level and gets me fired up is paying off a credit card.

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The stock market is all over the place lately, way down from the levels it was at last October. We have the media screaming recession, which may be true. I don’t think we will truly know if we are currently in a recession until months after it actually happens. The economy could be in trouble if something doesn’t happen.

Today President Bush plans to announce an economic stimulus package to help boost the economy. What would be part of this program is a tax rebate of $800 for individuals and $1600 for married, as long as you at or below the household income threat hold of $85k individual and $110k married. So what would you do with the money?

The government wants you to jump for joy like you won the lottery and go out and spend it. Sure, spending it will be a positive thing for the economy, but is that the best thing to do? You could instead put it in the bank and save it for when you really could use it. While it doesn’t stimulate the economy as much as spending, many people have no savings anyway. It could be used to help pay off some debt and help increase the net worth. I don’t think there is anything necessarily wrong you could do with this money.

I think the real thing we have to look at is will this package really help our economy come out of a recession, if that is what we are in. Nobody likes to pay taxes and an auto magic refund of $800 to $1600 is icing on the cake. Like all good things that come, birthdays, bonuses, tax refunds, we just have to be patient and see what will happen when the time comes. As far as what I think we’ll do with this money if we do get it, probably a bit of spending, saving, and paying debt.

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That day has come, taxes were due today. I drove by the Post Office on the way home and there was a line. Makes me glad I did mine a month ago because I didn’t have to deal with the mail. Why mail your taxes when there is electronic filing? I think some people might look at filing their taxes as a game and wait to the last minute just to add a little excitement. Maybe some people just forgot about their taxes, woke up this morning and thought “Crap, I need to do my taxes!” and got them in the mail today.

I already got my tax refund already, trying to figure out which debt to best utilize some it towards. I might focus on a smaller one just to give myself that feeling of almost having one card being paid off this year, which would be awesome. I’ve always been read that it works best to pay down the balance with the highest interest first though. We’ll see what I decide as I head into the final week of the month. Stay tuned.

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As April 17 is looming closer, I’m glad I did my 2006 taxes two weeks ago because today I got my refund. It is almost like an extra payday of my own previously earned money being returned to me like a lost pet. For the sake of priorities, I’ll split it up and use part of it to possibly pay down some debt, start an emergency fund for those situations that can and will arise, and use the remainder to give the checkbook a little buffer.

Although Uncle Sam gave me my money back, Mr. Lincoln thinks I need to pay the state more. I’m still debating if having a tax prep guy was the best way to do my taxes this year. Normally I always do them myself, but 2006 just felt complicated because of my student loans, mortgages, property taxes, getting married, my side business income and the like. For 2005 I used the box and it was pretty simple but I wonder if you really maximize deductions like the tax guy did.

Did you file taxes by the box or have them done?

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