new tax refund 1

In this video, the speaker discusses what to do with your tax refund. They explain that a tax refund is when you get money back from the government for paying too much in taxes. However, they mention that it's not ideal because you're essentially giving the government an interest-free loan. They suggest using the refund to pay off credit card debt, build up an emergency fund, or contribute to your retirement account. They also explain the avalanche and snowball methods for paying off credit card debt. Lastly, they emphasize the importance of starting an emergency fund and saving for retirement, regardless of your age. You Hey guys, welcome back to another video, my name is Kennedy and on this channel we speak everything personal finance I hope you guys have been enjoying the videos. We are uploading once a week Not sure what day but we will be able to Hope you guys have been enjoying the videos We'll be uploading once a week Right now and as we get as we and as we get things going we'll be uploading more and more But right now we are uploading once a week. So in today's video, we are talking about what you should do with your tax refund Let's get right into it It's tax time and you know that March April May It's April and you know what that means. It means it's tax time. We are all It's tax time and we're all getting our tax refund back if you don't know what tax refund is If you don't know what a tax refund is, let me tell you if you don't know what tax refund is a tax refund is And if you don't if you don't know what a tax refund is It is tax time and around tax time we are all excited to get something called a tax refund If you don't want a tax refund is let me tell you if you don't know what tax refund is a tax refund is A tax refund is a rebate payment to a taxpayer for paying too much in taxes So when you pay too much in taxes, you get a when you pay too much in taxes You get something called a tax refund back and you get that money back to you So it's really you getting your money back But the bad thing about tax refund is that you're basically lending the government Money and they're giving you that money back without paying any interest on it, but you're getting your money back You're but you're getting your money back which is called a tax refund And in fact, everyone does not get a tax refund everyone does not get a tax refund back in fact only Everyone does not get a tax refund In fact three out of four Americans get a tax refund with that tax refund being around $3,000 But like I said, but like I said keep in mind that money is all yours it is your money So you're really just giving Uncle Sam a free loan. But hey, at least we're in the back, right? But While you shouldn't aim to get a large refund tax But why you shouldn't aim to get a large refund Why you shouldn't aim but why you shouldn't but while you shouldn't aim to get a large But as but while you shouldn't aim to get a while you shouldn't aim to get a large refund back Here are some things that you can do with your refund when you do get it First thing you could do is pay off your credit card debt credit card Debt can really weigh down your financial future and put a big hinder on your financial progress over time Especially when you're paying minimums, especially especially when you're paying minimums on credit cards where interest rates are over 20% You'll really never pay off that you'll really never pay off that credit card in totality if you're just paying off minimums If you're just paying minimums But this is where your tax refund can but this is but this is where your tax refund can come help you But this is where your tax refund can come help you So what you want to do is put a certain amount a chunk or even all of it and then you're going to pay it off A certain amount a chunk or even all of it at this high interest credit card debt that's where you want to attack your high interest credit card debts first because as time goes on these cards will be occurring the most Interest and hold and holding you back from your financial future So the faster you knock out this credit card debt the more top the more expenses you can put The more expenses you can the more money you can put towards investments accounts the more money you can put towards investment accounts So There's two methods you can use so there's two methods So there's two methods you can use when paying off credit card debt The first one is the avalanche which attacks the highest interest at first and the second is the snowball method Which I first heard from Dave Ramsey so for the avalanche method say you have a Credit card that is 20. So you have a credit for the avalanche method So you have a credit card that has 20% interest and you have another credit card that has 15% interest so you're going to pay off the 20% interest first because that one will be accruing the most interest and Once you don't paying that off you then go to the 15% and so on so forth For the snowball method you start by paying off your lowest For snowball method you start repaying off your lowest credit card balance by snow for snowball method you start paying off your lowest For snowball method you start repaying off your lowest credit card balance by snow for snowball method you start paying off your lowest Balance of your debt and then you continue and then you gradually continue and pay the high then you gradually pay higher For snowball method you pay off the lowest balance of your debt and then you continue to go towards the highest So say you have credit card debt. That's $1,000 and then you pay off the lowest balance of your debt And then you have another debt that is $5,000. So you're gonna pay off this $1,000 and Inside your mind it feels and inside your mind. It feels better seeing these lower debts go away seeing your debt Disappear and it's easier to pay off lower debts. So you'll get a boost to pay off those higher debts So once you pay off the lower debt, you will then snowball that money into the higher debts and you'll keep doing This is something that I'm doing when playing off This is something that I'm doing while I'm paying off my student loans, my student loans are broken down to different categories It's all one chunk, but it's broken down to different categories I have about three I have about five to six student loans that I'm just paying off the lowest Because in my mind it makes me feel better to pay off the lowest debt and then continue to go that way So that is one thing you can do your credit That is one thing you can do your tax refund is pay off your credit cards And I highly recommend this be one thing that you do Maybe not use all the money pay for credit cards But use a good amount of it so you can get jump-started on your financial so you can get jump-started on improving your financial future Number two add to your emergency fund so Number two add to your emergency fund. I personally recommend if you have credit card debt You don't start an emergency fund yet, but you should have an emergency fund of say a month of expenses You should have an emergency fund of a month of expensive expenses but paying but funding your emergency fund could be a great thing to do with your tax refund And if you don't have an emergency fund if you don't have an emergency fund this would be a great time to start it So if you don't know what emergency fund is it's basically using it's basically when you calculate all your expenses and You basically when you add up all your monthly expenses I was I would say you're when you add up all the bare minimum of your monthly expenses That is your that would be considered your emergency fund So you will then multiply that number by three which is three months six or twelve? Months to get your emergency fund number and if the world and if you lose your job or something terrible happens you have that money that you can live off of for that certain amount of time until you find another job or Another alternative of where you're going to go until you find another job or however you want to handle So So an emergency fund is money set aside for a safety net So you to calculate your emergency fund so to calculate your emergency fund you want to get your bare minimum? expenses and multiply that by three which is three months six six months and twelve or Twelve which is twelve months and that will give you your emergency fund So if you lose your job You can have this money for three months six months twelve months to find another job and kind of make the transition easier So you're not relying on credit cards to fund so you're not relying on credit cards So you're not relying on credit cards when so you're not relying on credit cards all the transition is happening I Recommend having a three to six month emergency fund. So if your expenses are so if you're bare expenses I recommend having a three to six month emergency fund So if your expenses are two thousand for a month, you're going to want to buy that you're going to multiply that So if your expenses are two thousand dollars a month, you're going to multiply that by three and That will give you six thousand dollars for your emergency fund So if you're a bearer expenses, I recommend having a three to six month emergency fund That means if you lost your job today, this money should last you for six for three months or For three months, so that means if you lost your money if you lost your job today This money should last you for three months And you can do the same and if you're feeling really good about yourself You can do for six months, which is also another recommendation of mine and that will be $12,000 that you will have to have saved up So if you lose your job or if anything happens, you have that money in your account and it should last you for six months So I would recommend that you fund your emergency fund with your tax refund And depending how much money you get back for your tax refund it could put you weeks or months ahead for your emergency fund You can your tax refund could put you two months or three months ahead If you even if you don't have one your tax refund could put you two or three months ahead for your emergency fund So it's definitely something I recommend you think it's definitely something so it's definitely something that I recommend you look into Add to your retirement no matter how No matter how old or young you are it's never too early to it's never too early or late to add to your retirement And if you don't have retirement this is it if you don't have a retirement account You only have so much time you only you only come you can only make so much You only have so much time for your prime working here so we need to save your retirement now So that you don't have to work when you're 50 or 60 years old you don't have to work when you're 50 or 60 years old You don't have to work when you're 60 years old So that you don't have to work when you're 50 or 60 years old you can sit back and relax and enjoy your retirement earnings Enjoy the money you saved while you enjoy them and enjoy the retirement you earned And enjoy the retirement you worked for back in your 20s So a retirement Account that I recommend is a Roth IRA You could put your whole tax refund to your Roth IRA And if you did that every year you will come back with a lot of money You I'm going to give you guys an example of what this could look like by putting your money into a Roth IRA by putting it I'm going to give you guys an example of what a Tax refund of what this could look like by putting your money into a Roth IRA I'm going to give you guys an example of what this could look like Putting your tax refund into a Roth IRA and You'll be shocked by how much you've earned and by how much you've earned by just investing your money So we're going to say this person so we're going to say your start at 25 years old and let's estimate that you get a Let's estimate that you get the average which is about $3,000 which is about $3,000 back for your tax refund if you invest this tax refund into If you invest this $3,000 every year for 15 years into something like the S&P 500 Which has given average of which has which has Which has had an annual return weight which has had an error which has had an annual return weight Which has had an annual return rate of about 7% You would have Which has had an annual return rate which has had an annual return weight Which has had an annual return rate of about 7% If you so if you invest this money for 30 years, you will come back with about $280,000 If you invest this money in 30 year for 30 years by time you're 55 you'll have about $283,000 in your investment account Wait at Wait at At 8% return you'll have about 330 you have about $330,000 in your investment account And 9% you have about $408,000 into your investment account And at 10% you have almost $500,000 into your Roth IRA just by investing you have and by And at 10% annual return rate you'll have about $500,000 into your Roth IRA just by investing your tax refund This is not even including though up This is not even including the money that you could be investing throughout the year from your w-2 job This is not even including the money that you could be investing throughout the year and This is not even including the money that you could be investing into your Roth IRA throughout the year This is solely this is solely this is only off your tax refund Personally my Roth IRA through Fidelity, but there are tons of other brokerages where you can Personally my rock my personally my Roth is through Fidelity But There are tons of other companies that allow you to find a Roth IRA And For 2024 and for this current year the Roth bound and for this current year 2024 the limit that you can put into a Roth is $7,000 if you're under 50 and $7,500 if you're over 50 No, and for this year 2024 the current and For this year the 2024 the limit that you can put into your Roth is $7,000 if you're under 50 and $8,000 if you're over 50 You So if you invested your $3,000 into your Roth every year That means you only have to pay three hundred thirty three dollars a month to actually That means if so if you invested $3,000 into your Roth every year That means you only have to pay 33 dot you only have to put 30 that means you only have to invest 33 That means you only have to invest $333 into your Roth to max it out So definitely consider investing into your Roth, but first I highly recommend that you pay off credit card debt But first I will have to so definitely consider paying So definitely consider funding your Roth or beginning a Roth IRA with your tax refund It will help you tremendously as you progress into your financial. 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