taxesYou check the mail every day, looking for that brown envelope with the Revenue Canada logo on it. You can tell as soon as you pick it up that it is the cheque for your tax return. At long last!

What will you do with it?
You already spent it twice, and have to drop the whole cheque onto your credit card.
You have a trip planned and you need the money to pay for the flights.
You borrowed money from your parents anticipating a big return.

Sound familiar? About half of Canadians receive a tax return, and the average is about $1500. Many families plan on that tax return to be there to get them caught up from a year of overspending and Life Happens events for which they didn’t have a plan.

If this is your situation then it is time to create a different reality for this time next year. If you didn’t have to dump the whole thing on to debt what could you do?

noworlater1. Pay Down bad debt
Yeah, I know I said this already, but seriously, if you have credit card debt, pay this off first. No question, no whining. At 19% to 29% interest rates, a $5000 credit card debt is costing you between $950 and $1450/year in interest. Not paying this debt off is just bad math.

2. Pre-fund upcoming expenses
Want to stop accumulating that credit card debt going forward? Plan for your upcoming expenses so they don’t have get charged. What if you put your return into an account for gifts and donations – you wouldn’t be pulling the credit card out in December. Pre-plan for the roof repair that needs to be done this summer, the new snow tires that are required in the fall, or the kid’s camp fees.

3. Create an Emergency Fund
Debts paid and expenses planned for? Put some money aside for the crazy things that life throws at you. Gail vaz Oxlade calls it your Curveball Account. You think you have everything planned for and you have to drop everything to fly to BC to help your sister and the last minute flight is $897, the Curveball Account is there to cover it.
Bigger emergencies can cause you to need bigger chunks of cash. Consider building up what you need to cover three to six months of the basic life expenses. Then if you have a true emergency, you are not additionally stressed by money worries.

“Makes sense? Not sure where to start? Go to to book 15-30 minutes with me to talk about what you need and how I can help.”

Read tomorrow’s post for three more great suggestions!

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