6 Things I Did With My Tax Refund & Whether Each Was Worth It

As a recent college grad, tax return season is my favorite, because I get so. much. back. I am well aware that the further into the adult world I go, the less I will be getting back, but I am happy to live in my bubble of naivete for a little while longer. It is one of the best feelings, to get that extra cushion of cash sent directly to my bank account for me to spend as I please.

I knew going into this year that I would need to spend the majority of my refund paying down my credit card bill — the balance of which I had let reach dangerously high levels during my summer of unemployment, and the period of time between getting hired and getting my first paycheck. I’d hoped I would be able to put the rest into savings. It didn’t go…quite as planned. Here’s my breakdown, and whether each item was actually worth the expense.

Federal Return: $2,713

State Return: $576

Total Tax Refund: $3,289

1. Turbotax fees for premiere software and e-filing my state returns: $146

I’ve been more than happy to pay the fee for Turbotax deluxe in the past. This year, I had to level up for premiere, because something about filing my Health Savings Account made it necessary. I also had to pay to file two sets of state returns, because I live in Connecticut, but work in New York. It seemed easier to pay these fees than to deal with the hassle of finding another option. (Not really worth it; I likely will be using another e-file method next year.)

2. Paying down my credit card balance: $947

I’ve been doing a good job of paying off my balance in large chunks, but not such a great job in not putting more things on this card. It felt great to be able to pay off the total balance, even though I had some things pending, so my balance is back up a little already. (Definitely worth it, even though I never want to put myself in a credit card hole ever again.)

3. Putting a huge chunk into savings: $800

I wanted to put much more away, but such is life. My emergency fund now has a balance of $1000, and I feel wonderful about that. (Definitely worth it.)

4. Paying my friend back for one round of Broadway tickets, and then for a second round: $370 (out of my “don’t touch” state return)

I knew I owed this friend $180 for tickets to see Jessie Mueller’s last performance of Waitress. Aaaaand then Sara Bareilles announced she would be performing the lead right after that. So my friend and I immediately bought tickets to her opening night, and my debt to her doubled. (Probably/mostly worth it.)

5. Subscription to Weight Watchers: $100

I’ve been struggling to lose the *gulp* 30 pounds I’ve gained over the last three and a half years, and I finally realized I needed a good kick in the butt to do so. Luckily for me, I held out on signing up at the start of the year and now they’re running a promotion where your initial fee of $40 is waived and if I lose 10 lbs. in the first 3 months, I get $100 in subscription or cash card. It’ll pay for itself, hopefully. (Worth it.)

6. Treat yo’self spree: ~$240

As I mentioned, I haven’t been the greatest at not spending money once I pay down my credit card, but most of those charges are relatively necessary (or so I tell myself as I pay $20 to buy the lumbar support, cushion that was on the Amazon deals list a few weeks back). I haven’t given myself a true treat in a while, because I’ve been so obsessively watching my money. So I bought a new pair of ankle boots on Amazon and some new, cute yoga clothes at Athleta (and, go me, everything I bought except my new yoga leggings were discounted by some amount). (Worth it.)

Total Spend: $2,593

Remaining: $686, which will be used as my checking account buffer for now, but $200 of which I will be pulling out in cash to spend on a trip in two weeks so I stop charging to my credit card

I had hoped to put more of this year’s return to savings, but shit (or Broadway tickets) happens. I did learn something from tracking this return, and that’s to pay attention to whether your spends are worth it. I know now I probably won’t use Turbotax again, but also that using one-third of my money was worth seeing my credit card balance get to zero, even if I never want to have to do that again. I also think that by doing one big treat yo’self, I’ll hopefully stop excusing little expenses that often rack up to way more than just one big splurge. I might have to adopt this method of writing down everything I spend money on (at least temporarily) to help me truly pay attention to what I’m doing with my expenses.

Olivia currently works in marketing and likes to say she spends her free time doing yoga, reading, and writing, but mostly winds up obsessively checking Twitter and watching HGTV.

Image via Unsplash

  • alyjarrett

    I would highly recommend that you spend $50 of your refund on an annual subscription of You Need a Budget (YNAB) to keep yourself more accountable in regards to spending (I’m not paid to recommend it, I’m just a huge fan!). One big splurge will definitely not stop you from making little purchases, but looking at the cold hard truth of where your money is going will.

    Also, and this is just my two cents, but your language of “hoping” you’d put more in savings or stop digging yourself deeper into debt makes me think you’d probably be better off chopping up the credit cards and not using them entirely. Some people are natural spenders, and there’s no shame in removing the risk of future debt from your life. That way you won’t be buying impulsively when you don’t have the cash to do so.

    Keep on building your emergency fund to 3-6 months of expenses, so you never have to go into debt when you face unemployment again!

  • Ellie Rockhill

    Here’s what I did!

    Refund: $2700

    Emergency fund: $1000
    Pay off debt to my bf: $700
    Credit card balance ($2000 initial balance): $550
    Remainder into checking account buffer: $450

    I really debated whether or not to put the remaining $450 into paying off the credit card, but decided ultimately I need to get better about leaving a buffer, not just teetering around $100… or less. I use YNAB, so it was particularly difficult because I want to give every dollar a job, and even though one of the YNAB rules is to live on last month’s income, I am still having a hard time getting myself to actually treat the buffer as a job, not just a little “Extra” fund I can pull out of if I need, say, a pair of tennis shoes or a hair cut.

    But I realized that without the buffer, I have a higher chance of getting back into other problems (like owing my boyfriend money, or maxing out a credit card (now closed)).

    I -am- proud of myself though, because every single year prior I’ve always blown my return on something like a trip, clothes, or furniture. Or just let it be all “extra” money that goes towards random stuff one $10 and $20 purchase at a time. This year I told myself (the first year I’ve gotten a return unmarried and not a college student) that I would be a grown up and use the money as if I never got it (so, save or pay off debts). Yay that!

    • alyjarrett

      Awesome! I think the best part about YNAB is that it doesn’t matter what account your money is in, so there’s no real reason you need a credit card because you’re only budgeting money you actually have. I’ve been using the software for over three years now and I’ve almost quadrupled my net worth, so keep it up!

  • Congrats on joining Weight Watchers! I joined in 2015 & it helped me lose over 40 pounds. It’s definitely worth the cost. (I wrote a post on here about the money I spent losing weight — it wasn’t pretty but I’d do it all over again!)

    • BI

      I’d be super interested in reading about your experience with Weight Watchers (and not just the financial aspects) if you ever decide to write it!

  • Even though my husband and I have our withholdings set at 0, we only got about $1300 back this year! Darn. Luckily, we have paid off all of our student loan debt (and credit cards!) as of a couple of weeks ago, so this money is going towards our savings goals now!

  • R@chel

    I was able to use my refund to pay off one of my smaller student loans. One less loan to my name and starts that snowball effect!

  • Alexis

    This was such a nice piece to read and, judging by the comments, timely as well as inspiring! I wonder whether TFD should do a tax-return challenge or series every year? Beforehand to remind people that it’s coming up and get them thinking about where they might allocate some of their refund to achieve goals, then after refunds to give some case studies or examples of what people ended up doing. What do you think? There could even be a support thread or a TFD community challenge to make the most of your refund! Or something – don’t mind me, just spitballin’ ideas here 🙂