Windfall

When we come into money very fast we tend to spend it much faster then if it was in our wages. Right now being tax refunds for some of us. This needs to be reconsidered. First off we need to make sure that we can live our daily life's. Then we need to make sure our retirement fund is funded. We don't need that new TV or iPad. When it comes to a tax refund. Our wages were over withheld. We should have had that money in the first place.

When we win big gambling. Did we really win big? I mean that in a sense of over the long haul are we up big gambling? Is this going to fund our next gambling trip? I suggest tracking your gambling winning and losses. Don't estimate what you've done in the past. Start today as you're at zero. Start an excel worksheet.

Inheritance is a hard thing to go over. When ever people talk about inheriting items they always seem to talk gross. There are a lot of expenses involved in inheriting money. Let say you inherit a house, cash, and or items worth $10,000. Don't go out and spend it all. Whether it be a car or a motor home. Look at your finances first. Maybe the hourse cost $150,000 split in 1/3. Your not going to walk away with $50,000. When you go out and buy $50,000 vehicle because of this inheritance you're going to be tapping into other money leaving you worse then you were.

After some windfalls a lot of people end up spending more then what they received. Maybe you won $75 and end up spending $150 celebrating. If you want to celebrate take the money in cash for how much you won. The conventional wisdom is to save 97% of the windfall. If you're going to spend more then that make sure you hold it in cash. If it's a lot of money make sure you have 3 months of savings available before you spend it. It doesn't all need to go to three months of savings, but you should at least partially fund it. If you're behind in your retirement put the money there.

Finally receiving payment from someone is not a windfall. I have made the decision to loan out money to my parents before. Not something I plan to do again. At least not to the people that I did. When I finally did receive some of it. It kind of did feel like a windfall. It's not though. That money was hard earned. Payment for working extra can fund that item that you want though. If you pick up an extra part time gig to buy something then spoil yourself.

Make a plan to what you're going to do with your large one time income. I've made the mistake of saying in my head well I won at the casino this is fine. It turns into rough estimates and telling myself I can spend $50 multiple times for winning $50 one time.

Tax Season

Well with tax season just about ending. I've seen several different situations from young to old, form owing a lot to receiving a big refund. I want to go over the odd situations that just don't make sense to some people. Now I think the goal is to always try to get as close to zero as possible. I always want to say a lot of people get frustrated when their told that they owe money. People seem to be so shocked. Once you've seen your tax return final number adjust it on your W-4. You can add additional withholding. You can also adjust your deductions. Maybe you want to claim an additional deduction to lower your refund or maybe you want to take away a deduction to withhold more tax.


One Lower One Higher

Employers look at peoples withholding individually. They look at your income and your W-4 and withhold based on that. When there is such a discrepancy in income that people are in different tax brackets is the lower income person is under withheld, because he's being withheld what tax bracket he would be in not their combined income tax bracket. Can you file married filing separately, yes. Actually usually married filing joint is better in these situations. It's really going to be based on how many itemized deductions you have. Lets say one person is retired and one person is still working. The working person makes more then the retired person. They are likely to owe. I would have then withhold more. It really doesn't matter who.

One High One None

Maybe it's a stay at home dad. Lets say one person is working and one person is in school. I would have the worker claim an additional withholding, because when they go to file it's almost like having a dependent. Now additionally when you have income from another source that is rather small. If you receive a one time check your likely not to get anything withheld. Which in their case would lower their income, because nothing is being withheld. I would say that's a good thing though.


It's not a bad thing to owe just as long as you can pay it. A lot of people struggle saving. Maybe you don't want to save by adding to your retirement. Maybe you want to get to the money soon. A good way of doing that is adding $50, $100, or more to additional withholding on your W-4. You'll receive it in a refund. Now if you don't have a problem saving and would rather put your money in the market or bank and make a little something. Try to lower your refund number. If you can pay there's nothing wrong with owing. Now personally I've found that the people that have owed a decent size amount. It is very stressful.

Rent vs. Buy

I really know absolutely nothing about housing market. There's a lot of math involved. Surprisingly buying is not as much of a no brain as I thought it was. Your home really does need to appreciate. In today's day in age when the market has bottomed out the only way is up. The market is definitely turning around and some people would say in a lot of areas it has turned around. I thought I'd give out this link. This link is absolutely great. It takes everything that I can think of into consideration. I just thought it probably doesn't include maintenance but it does. Every housing market is different. Everyone is in a different situation. This decision is different for everyone.

http://www.nytimes.com/interactive/business/buy-rent-calculator.html?_r=1&