This blog contains some simple tips and advice from two regular guys. We're not accountants, financial advisors, or brokers, so follow, ignore, or discuss our ideas as you see fit.

Saturday, September 1, 2007

Give your savings a "kick"!

Posted by Matt
It's that time of year again; today's Oregonian ran an article about the annual state income tax "kicker checks". For those readers outside of Oregon who've never heard of this, our state refunds all income tax revenue that exceeds projections+2%. This year, that came out to 1.1 BILLION dollars.

Lots of people debate this practice, but I think it is a good way to keep a lid on government spending. I assume that the government would find a way to spend every bit of money we gave them, but it is just important for them to stick to a budget as it is for us individual citizens. Also, as the article points out "...the state's current two-year budget is 20 percent higher than the last one," so I think it is good to have a limit on their spending. Heck, I didn't get to increase MY two-year budget by 20%.

So, I'm excited about the money (the checks should be mailed out in mid-December), but also want to make a suggestion: let's not waste it! The timing is terrible; people will probably take their kicker checks and use it to bump up their holiday spending. I'm going to put mine toward my new Roth IRA (which I plan to discuss in my next post).

I think the Roth is a great place to put "found money" like this, and we'll probably start putting our federal and state tax refunds away here also. The kicker law in our state constitution is in place to keep our state "on budget", so let's all do the same for ourselves. Send a "kicker check" of your own....straight to savings!


Anandi said...

I heard advice somewhere about what to do with windfall checks like this, esp if you're not thrilled about the idea of doing something practical with the whole thing: save half and then spend the other half on something you normally wouldn't buy. You'll still get to 'splurge' a little but you'll also have put some aside for later.

Obviously, the best plan would be to save the whole thing, but not all of us are that disciplined :)

Matt said...

I do sometimes take a little out for fun. Usually, I would transfer a nice round number to savings/investments. For example, if I received a check for $556, I'd cash it and put the $56 into my wallet and stash the $500 out of reach.

If nothing else, it saves a trip to the ATM!