Debt Free 101 – #20 Adjust

#20 adjust withholdings                                   

A wise man will hear and increase learning, And a man of understanding will attain wise counsel. Proverbs 1:5 (NKJV).

Source: via Brian on Pinterest

Raise your right hand.  Repeat the following: “the King of Free is not a tax advisor. The following is not tax advice.  I will seek the services of a competent professional to advise me on tax matters and not a guy that uses the third person and lives in a fairy tale.”  Thanks.
You can adjust your withholdings. It is allowed. Talk to a tax professional to double-check. See your HR person or office manager – whoever is in charge of tax matters at your employer, and ask for a W-4 form.

Adjust your withholdings so that you are not paying the government as much during the year. Your HR person may tell you this is not ok. Be prepared for that.  Once we adjusted our withholdings we had more disposable income during the year for our DSJ. The admonition here is to have a purpose for the extra weekly income.

Note: your tax refund will most likely be less than in prior years. Also, don’t withhold a ridiculous amount so that you owe the government a ton either. Use an online estimator to help you on this one.
Prior to our DSJ, we always treated the tax refund as a bonus or found money. Not a bonus – IT’S YOUR MONEY. You just don’t get to use until the following year. Why people get excited over a tax refund, I’ll never know.

We didn’t want to give the government an interest free loan anymore. We wanted to use our money during the year so that we would pay less interest ourselves on the debts we owed personally. So that’s what we did. We were withholding too much. Most Americans are. We liked our tax refund. Most Americans do. We stopped withholding so much and we got out of debt.

What are your thoughts: refund or no refund?

READ THIS: The Millionaire Mind by Thomas J. Stanley.

  • dogaba

    Fantastic advice. I am hoping to get this started this year.