Hey everyone, it’s Finance Fridays. I’ve realized that recently all I’ve talked about is Crypto. Crypto is fun and interesting, but it’s not part of The Philosophy. So let’s bring everyone back to Earth and talk about the most fun season of all “Tax Season is Upon Us”.
Tax Season is Upon Us
Well, what is there to say. Break out your W2s and get all your financial documentation together and go pay the tax man.
Hopefully, you were able to figure out your Taxes a head of time so that you don’t have to pay too much or won’t get too huge of a refund. I’ve talked about taxes before here:
- Taxes and Tax Withholding
- What is a 1031 Exchange?
- Taxable Accounts
- Being Tax Efficient
What about you Sensei?
Well, since I finally got my solar panels in this last year: Solar Panel Update and I was pretty conservative in my tax withholding. For this reason, I am expecting a pretty sizeable tax refund this year. It’s been a lean 2017 since I had to pay for the solar panels up front out of pocket, so getting that refund will be nice.
For those of you who expecting a refund this year (like me), it’s probably a good idea to put together a priority list of what you want to do with it. My advice would be to put it toward something with future value, ie. not a depreciating asset like a new car or something materialistic.
For example, I haven’t quite decided where to put my refund yet. However, since Student Loans continue to weigh on my mind — as well as my wife’s mind, I think I’m going to use most of the refund to attack that. Some of the refund may go toward doing some small fixes around the house so that they don’t become big fixes later.
There are also some slight changes to my budget in the near future as well. Kylie will be starting public school in August and Lucas will stay at the preschool near our house. This will cut down on monthly child care costs. Also, my Rav4 will be completely paid off in March — I think the last payment is due end of this month.
As long as our emergency fund is healthy, I can finally start implementing my plan of putting more money toward the 529s for the kids. Read about 529s here:
- What is a 529?
- Choosing a 529
- Let’s Talk About 529s
- My 529 Allocation
- Let’s Talk More About 529s
My wife and I will also see some small bumps in salary this year as well as a few extra dollars from the tax changes. So all in all, it’s time to set my plan of attack on our student loans into high gear this year. Unfortunately, you can’t currently auto-pay “extra” on your loans using Navient.
For this reason, my plan is to pick a day near the end of the month and take stock of our finances. I’ve chosen “near the end of the month” because the lion’s share of our expenses are paid in the beginning of the month (mortgage) and middle of the month (credit card bill). So basically I’ll do a snapshot of our bank accounts and our credit card and anything I consider “excess” will be thrown at our student loans on a monthly basis. This will happen for the next 5-7 years, like clockwork, at which point, I hope they will be gone. That’s my goal anyways.
So basically, although we are potentially in a better place financially this year than we were last year — nothing will change in terms of our lifestyle.
So, just student loans?
However, I am also a big proponent of buying experiences, not things. For this reason, I do still plan to put a little money away a month to put toward another family vacation for 2019. I’m hoping our little California vacation this year goes well, and maybe next year we can venture a little farther, maybe to Japan or Europe. Or if want to do something low key, just do a cruise here or island hop or something. Either way, I think it’s a nice thing the whole family can look forward to.
Wait… what about Crypto!!? and Searching for Amazon!!?
Crypto is really so interesting. It occupies most of my free time nowadays as I want to learn more and more about it. However, don’t forget what I said:
Crypto is GAMBLING.
For that reason, I have very little invested in it, relative to my retirement accounts.
That said, I do believe that an “Amazon” will emerge from the rubble of a Crypto Crash, I just don’t know which one it is. If/when a real crash happens, or the bubble bursts — I may pick a horse to win and throw a small bet on one to be the phoenix that rises from the ashes.
My Unpopular Opinion: I don’t think it will be Bitcoin or Ethereum.
If my pick emerges from the rubble to be the next Amazon, you can catch me on my yacht in 2030.
Do I need to pay taxes on Crypto?
For all you guys making lots of money in crypto — PAY YOUR TAXES.
The IRS is 100% aware of what is going on. While it may not happen this year, in the near future the IRS will almost 100% begin auditing people. They will gain access to your trade history from exchanges and take what is owed to them — with interest. Pay now or pay more later – your choice.
This is outside the scope of this blog post, but here is a good primer on paying crypto taxes from Forbes.
Remember — There are only a a few certainties in life — Death, Taxes, and Student Loans
Pay the tax man.
Expecting a refund? Think of a good plan for its use.
If you’re going to buy anything, buy experiences.
If you made any money on Crypto, pay your taxes.
Pay now or pay more later – your choice.
Agree? Disagree? Questions, Comments and Suggestions are welcome.
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