bankruptcy blog
Financial Distress of a Growing Family
“It is getting dark outside,” my son announces rather proudly. In a burst of energy, he takes off, sprinting in loops around our house. Bedtime nears and he is trying to outrun it. Eventually, my wife or I usher him to bed, his small but mighty footsteps echoing as he pounces upstairs. Now it is time for me to put away the toys, stack up the books, do some dishes, and hopefully settle onto the couch before 10 PM.
Then the morning arrives, a 6:30 wake up. I no longer need an alarm thanks to my son. At some point probably around 11 PM the night before, my wife got me to sleepwalk upstairs to bed from the couch. The morning routine involves sips of coffee snuck in between diaper changes and checking the day’s weather forecast. Life with a child is a lesson in constant movement.
My wife and I will pause in the brief moments between all of the activity to appreciate how we have gotten where we are. In three years, I graduated law school, got married, took the bar exam, started working as an attorney, had a child, bought a car, bought our first house, and then merged with Koenig|Dunne. That is a lot of life to handle. Constant change has been a regular part of my life for the better part of the last decade.
Each major change has presented an opportunity to evaluate and reassess where we are and where we are going next. One of the main topics of conversation in this process has been our family finances. For us, having our first child necessitated a reassessment of how we spent our money. An expanding family drastically impacts financial decision-making.
The expanding family can manifest in a variety of forms. It may be that your boomerang child came back home or your aging parents now live with you. It may be that you’re unexpectedly taking care of your grandchildren. These are some of the realities that I witness in my bankruptcy practice. Life is dynamic. Life is expensive. Life is full of unexpected twists and turns.
When the perfect storm of these life events occur, you may find yourself in a situation where the incoming money is not enough to cover the outgoing expenses. I encourage making a budget when these life changes are about to occur or have occurred. Here is a free form you can use to help: Blank Budget Worksheet. It helps to reset the understanding of your finances so that you are empowered to make informed decisions. You may discover that you are spending more money on certain items than you had thought. You may determine that some expenses can be eliminated altogether.
I understand that life is busy and, at times, frenetic. We can all try to outrun evaluating or making tough financial decisions. Peace of mind and control starts with finding or creating brief moments of pause to really look at and understand your situation, reaching out to trusted advisors when assistance or support is needed.
How to Spend Your Tax Refund Wisely
How many people have you heard lately say “I am going to buy that when I get my tax refund?” For many, tax refund season means that they can catch up on bills, buy their kids new clothes, or finally fix that leaky roof. According to SmartAsset, the average household federal tax refund in 2014 for Nebraskans was $2,502.00. Tax refund season always seems to come just at the right time. Receiving W-2s can be more exciting than opening presents during the not-so-distant holidays. For me, I have to be conscientious with how I am going to spend my tax refunds because I always dream big.
Each year, my wife and I devise a plan for how to spend our tax refund money. One year, it was a new laptop. Another, it was for a down payment on a new car. This year, we are going to spend it on some home improvements and repairs. The refund can be spent quickly, leaving you with a feeling that you never received the money to begin with. I understand how expensive supporting a family can be. When receiving a large sum of money, it is tempting to spend it without much thought or consideration.
When determining how or what to spend your tax refund money on, it is helpful to write a list, splitting it into items you need and items you want. An item of need supports your or your family’s health, wellness, and safety. All else may be considered an item you want, but do not need. I try to focus my attention on items of need.
For each item, writing down the estimated or anticipated cost helps you determine the best way to spend your tax refund. A wise part of your plan should be to save a set amount or percentage of your tax refund for miscellaneous expenses that pop up throughout the year.
It takes discipline to hold yourself to these standards as you’re making decisions. You may want that smart TV, but your car really needs new brakes. Yes, a puppy is much cuter than a repaired plaster ceiling in the playroom.
During this time of year, you may be looking at your financial situation for the first time since receiving your last tax refund. For my family, I try to have the mindset throughout the year that the tax refund is not guaranteed. I avoid incurring debt thinking that I will pay off the charges with my tax refund because life is adept at throwing curveballs. Planning for how to spend my tax refund reminds me that mindful money management can be easier said than done. However, taking control of your finances through intentional planning allows you to adjust as life throws those curveballs. Taking the time to make tough financial decisions will empower you throughout the year.
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