TAX REFUND IN 2020? - HERE IS WHAT YOU SHOULD BE DOING There are 5 steps I want you to take if you have a tax refund in 2020.
Let me start by saying, my hope is for you to learn as much as possible so that you do not have a refund in 2020. Having a refund check is equivalent to giving the government an interest-free loan for 12 months. As a result, try your best to plan for the future and ensure you have no refund checks moving forward (or ensure they are minimal). The better prepared you are to face the financial challenges of this world, the better equiped you will be to live out your TRUE DREAMS and your TRUE PURPOSE.
*Note: You can follow along using the Google Sheet link here:
Step #1: OPEN A HIGH YIELD SAVINGS ACCOUNT
Why? Before you do anything else, I want your money to be tucked away to prevent you from spending it too quickly. Putting it in a high yield savings account will ensure the money is out of sight and mind to give you the time it will take to truly organize your finances. I'm not saying you'll have to leave it here forever, but I do want you to start here and go through the next four steps once this is complete.
STEP #2: CREATE A BUDGET
Total all your income and your expenses. Understand your:
1) Basic needs - Home/Utilities, Transportation, Groceries, Debt Minimums, Required Monthly Expenses
2) Everything Else - Your Free-spending, Shopping, Fast Food, Weekend Fun Spending, etc.
3) Savings/Investments/Debt Payoff - Understand how much you're saving each month to contribute to savings, other investments, or your debt miniimums.
Once you have a good understanding of what you're spending your money on, you can move on to step #3 to understand how to put your spending on autopilot.
STEP #3: OPEN YOUR BANK ACCOUNTS AND ENSURE THEY'RE FULLY FUNDED
There are four accounts I want you to focus on for purposes of this video. 1) Your high yield savings account - should have 2 - 6 months of your monthly basic need expenses. 2) Your bills account - should have 1 month of your monthly expenses. 3) Your cash account - should have your cash allowance for free-spending (not to be used any longer once your monthly allowance runs out). 4) Your business account - to include all your business transactions (income and expenses).
Now that all accounts are opened and fully funded, you can move on to step #4
STEP #4: PAY OFF ALL BAD DEBT
This will include all bad debt (credit cards, vehicles, and any other debt over 5% interest that should not be leveraged). While leveraging debt is subjective, I want you to follow a few rules of thumb to understand your current level of leverage tolerance. If you can say yes to any of the below, you should not be leveraging debt:
1) Do I owe money on my credit cards?
2) Do I have bills in collections?
3) Am I behind on any of my bills?
4) Am I deferring my student loans?
STEP #5: LEARN FROM THE GREATS!
Learn the conservative approaches from Dave Ramsey plus the more aggressive strategies of Grant Cardone and Robert Kiyosaki. Study the more modern approaches from people like myself and Graham Stephan. Develop a mentality of technical mastery so you have the knowledge necessary to develop your own thoughts on how money should be managed. Once you've done that, you should have all the answers to what you should do next.
This will allow you to make the following decisions:
1) Should I use credit cards?
2) Can I use credit cards to travel hack or point hack?
3) Should I pay off my college debt (student loan debt) or leverage the debt?
4) Should I have the car I currently have?
5) Should I be paying more than 5% on a vehicle?
Allow knowledge to fuel your ability to manage money. I believe in you!
People I look up to relative to finances that also have different view points:
Dave Ramsey:
Grant Cardone:
Robert Kiyosaki:
Graham Stephan:
0 Comments