Use Your Tax Refund to Start Getting Out Of Debt

Use Your Tax Refund to Start Getting Out Of Debt 5.00/5 (100.00%) 1 vote

If you would like to use your tax refund to start getting out of debt this year, KnowledgePoweryou’re not alone. Thousands of Americans are looking for ways to pay off unwanted debts, and using their tax return at the beginning of the New Year is one way they can accomplish this. One of the best ways to determine where your money will be going is to create a personal budget on an Excel spreadsheet so that you can see exactly what you need to do. In this article, we will show you how creating a budget is very simple to do using Excel, plus how to use your tax refund to pay off some of your existing debts.

How to Create a New Budget Spreadsheet

First of all, you need to have Microsoft Excel on your computer. If you do not own this program, there is another program called Open Office Calc. It is a free software program which is available for download at the website OpenOffice.org. However, for the purpose of this article, we will be showing you how to accomplish this with Microsoft Excel.

The first thing that you want to do is open a new spreadsheet file that will detail your monthly budget for the year. You will want to copy the following information into the very top row of the spreadsheet (minus the quotes):

“Date”, “Description”, “In”, “Out” “Total”

You should save this file as a master copy so that if you want to make a weekly budget using the same setup, you can quickly and easily create an additional file and save it under a different name. You can also do this very easily by scrolling to the bottom of the spreadsheet, right-click your mouse, and select “copy sheet” which will automatically copy the master copy to a new spreadsheet. You can then save it under the filename of your choice (Monthly Budget, Weekly Budget, etc).

Once this is done, you can begin to budget your money.

How to Budget Your Money Using This Excel Spreadsheet

Starting with the Monthly Budget worksheet, you can begin to add the necessary data. First put your income for the month under the column “In”. You can also list your recurring bills in the column “Out”, making sure to add a “-” in front of the amount as it represents an amount being subtracted from your income. Continue to list all of your income and expenses, along with the dates and descriptions associated with each one. Once this is complete, it will then be able to calculate your monthly budget.

How to Calculate Your Monthly Budget with Your Excel Spreadsheet

After all of the information has been input into the spreadsheet, you now need to use the “Total” column, the last one on the list. You’ll want to first click the top spot in the “Total” column and then click the “Auto Sum” button on the toolbar at the top of the spreadsheet. Then, click the first box in the “Out” column, press your control key, then click the top box in the “In” column. This will automatically calculate the total for your income and expenses in that row. You will want to do this for each row until you get to the bottom. Then, once you have all of the calculations in the “Total” column, drag your cursor down until you are a few spaces below the last calculation, and click “Auto Sum” once again. This will give you the grand total for all of your income and expenses at the bottom of the “Total” column.

How to Evaluate Your Personal Budget

This final number that you have calculated will be the amount of money that you should have left over at the end of the month if you adhere to the budget that you have just calculated. A negative figure represents having more expenses than income. If the figure is positive, then you will have money left over at the end of the month. Once you have gone through the process of creating a budget, you will be able to adjust your monthly budget very easily, and using your tax refund, you will be able to calculate how to pay off existing debts using this handy Excel spreadsheet.

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ABOUT THE AUTHOR

This article was written by the writing team of NewHorizon.Org. The company is continously giving out information to people who are ready to repair their credit and improve their credit score. Also NewHorizon.org team strives to empower the homebased and small business owners by bringing information that can help them to manage and grow their businesses. Let our 14+ years of business finance experience help you to get the financing you need! Contact us if need financing for yor business.

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8 comments for “Use Your Tax Refund to Start Getting Out Of Debt

  1. Sara
    March 10, 2013 at 4:00 pm

    Great post as so many people I know are using their refunds to pay off their debts and to go on vacation, which in the end could rack up more debt if they are not careful.

  2. Ashley
    March 15, 2013 at 5:32 pm

    This is why I would not want to get into debt if I could help it. I do not use my credit card unless I have to because I look forward taking the vacation of my choice and paying for it from my refund. Would not want to pay credit card debt with it.

  3. Deb
    March 18, 2013 at 2:36 pm

    I had a horrible experience with racking up debt 10 years ago and it was one of the most stressful times of my life. I did end up paying off a lot of it with my tax refund but it was still not enough. Thankfully I paid it off through other means but now I will not use a credit card unless I have to. Never want to go through that again.

  4. Kelly
    March 21, 2013 at 3:28 pm

    I have been there in the past. It felt liberating to get the refund to know the debt would be paid off however I missed out on spending that refund for the vacation I wanted to take.

  5. Talia
    March 24, 2013 at 6:16 pm

    Well it is a sad fact that a lot of people have to use their refunds to pay off their debts instead of using it to enjoy themselves. However I would think that they would be thankful to have the money to pay towards their debts which would mean later on less stress.

  6. Michael
    April 6, 2013 at 6:48 pm

    My debt is too big for me to get out of just by simply using the tax refund, but if possibly I guess it’d be a good start. Year 2012 was the year of loss for me anyways and I’ve got to do lots of calculating to add up all the losses I need to report. It’ll be a pain in the ass. I’m way over my head though. Even it would cost me a little, I may have to speak to a professional debt counselor about my situation.

  7. Noah59
    April 7, 2013 at 11:46 am

    It never occurred to me that it’d be this difficult to get out of debt, once you dig yourself big enough of a hole. I thought I’d always be able to pay off my debts with time, but real life has a way of surprising you and not in a good way, in the most difficult times and that’s when you get screwed. I’m working hard to get back on my feet and using tax refund to start getting out of debt sounds like a good place to get started.

  8. Melanie Mathis
    April 9, 2013 at 5:45 pm

    Hi Michael! That’s definitely a good start. Good luck getting your debts fixed

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