Mother’s Day and your taxes. What do they have in common? It pays to get ahead – before you have to resort to a last-minute gift card and the flower bouquet nobody picked at your favorite Houston grocery store. (Don’t worry – you’ve got 13 days left to make sure that doesn’t happen).
And speaking of getting ahead…
The time to start thinking about your tax situation for next year isn’t when you’re filing, it’s right now.
An easy first step: Checking your tax withholding. No, really – do it now. Because the sooner you do, the less tax surprises you’ll be in for next year. And, more money will end up in your pocket (instead of the IRS’s) with each paycheck.
(Hint: If you got a large refund this year, that’s a sign you probably had too much withheld. Vice versa if you owed the IRS. You can find out by using the IRS’s Tax Withholding Estimator as a guideline… or we can set up an appointment to discuss that: calendly.com/postalplustax
Something else to check on: Starting May 5th, the Department of Education is resuming federal student loan collections for borrowers who are in default (that’s 9 months or more behind on payments).
When collections restart, they can draw from your tax refund, your Social Security benefits, and even your paycheck through wage garnishment. So, if you’re not 100 percent sure where you stand, check your loan status now (which you can do here). Try to make whatever payments you can – even small ones can keep you out of default.
If your monthly payment feels impossible with your current budget, it’s worth looking into an income-driven repayment plan. It can legitimately slash what you owe each month (based on your income and family size). Depending on your situation, there might be better options too, like consolidating your loans or entering a rehabilitation program to clean up your default status altogether.
I know this all might sound like a lot to stay on top of (which is one of the reasons I write to you each week). But taking the time to make these intentional moves – adjusting your withholding, checking your loan status, and the like – is well worth it. Because right now, it quite literally pays to be financially smart.
And another big example I’m seeing my clients working through right now? How they use their tax refund. If you got a refund this year, you’re holding a powerful opportunity in your hands. And if you use it strategically, you could be setting yourself up for something a lot better than just a bigger TV or a spur-of-the-moment vacation. Let me show you how…
Get a Tax Refund This Year? Postal Plus, Tax & Bookkeeping Services’s 4 Financially Smart Ideas for Using It
“The obsession with instant gratification blinds us from our long-term potential.” – Mike Dooley
The average tax refund for the 2024 tax year is around 3,186 dollars. If you find yourself getting a refund in that ballpark this year, you’ve got a rare gift – a bit of financial breathing room. The key now is what you do with it.
Because the reality is, a tax refund isn’t a windfall. It’s your own money – a year-long, interest-free loan you gave Uncle Sam.
But now that it’s back in your hands, you have a choice: You can spend it on something momentarily gratifying … or you can use it to reinforce your financial foundation.
And no, this doesn’t mean you can’t enjoy some of it. The goal is to avoid lifestyle inflation – that subtle pressure to start spending more just because you can. I’ve got a few ideas on smarter ways you can put this money to work…
#1: Knock down your debt. Your high-interest debt (credit cards, personal loans, even private student loans) acts like financial quicksand. Because they typically carry non-deductible interest, you’re not getting any tax benefit from the cost of borrowing. And your tax refund could offer a way to start climbing out.
Focus first on credit cards. Anything with double-digit interest is a fire you want to put out fast. Once that’s handled — or at least dented — move to other debt with rates above 6 percent (the point where your money would likely earn a better guaranteed return by paying off debt rather than investing).
You may not have enough to eliminate your balance, but even a partial payoff will reduce the interest compounding against you every month.
#2: Strengthen your safety net. At all times, you should have 3–6 months’ worth of living expenses in a dedicated fund. If you’re in a dual-income household or you have a really stable job, three months might suffice. But if you’re self-employed, have a single-income household, or have fluctuating income, you’ll want to lean toward the six-month end.
Because a leaky roof, a trip to urgent care, or even a car repair doesn’t wait until your budget’s ready. And the mess you’re in will only get messier if your only fallback is a high-interest credit card or personal loan (or worse, tapping a retirement account early, triggering early withdrawal penalties and tax consequences).
Set aside some of your tax refund in a high-yield savings account. Look for options earning north of 4 percent APY (to help your savings keep pace with inflation).
#3: Look at the horizon. Only after you’ve addressed your high-interest debt and built up a safety net should you look into investing in your future. You need a sturdy foundation under your feet before you move forward.
If you’ve got a workplace retirement plan, check to see if you’re maxing out your employer match. And if you’re already on track there, look into an IRA (traditional or Roth, depending on your tax bracket and future plans). Getting compounding interest over time on your side is what’s important here.
Or, if you’re looking to dip your toe into the broader market, consider low-cost index funds that track broad market indices like the S&P 500. They offer built-in diversification and historically solid returns (around 7–10 percent over decades).
Just remember: Any investments held outside tax-advantaged accounts (like an IRA or 401(k)) may be subject to capital gains tax when you sell them. And, dividends can be taxed annually depending on the type.
If you’ve got kids, think about starting or contributing to a 529 plan. Every dollar you put in now is one less you’ll have to borrow later — and qualified withdrawals are tax-free.
#4: Invest in your home. Your Harris County home is more than a roof over your head – it’s one of the most significant capital assets most people ever own. Maybe not one that earns dividends, but one that certainly retains and can appreciate in value. Especially in a stable or growing real estate market.
Focus on putting your tax refund toward preventative maintenance improvements that help 1) extend the lifespan of your home’s core systems, 2) prevent expensive emergencies (like water damage or a failed heating unit), and 3) up your Houston home’s curb appeal. These are the main things that translate to higher resale value.
Also worth noting: If your home improvements are an energy-efficient upgrade — like adding insulation or replacing HVAC with a qualifying energy-efficient unit — you could qualify for the Energy Efficient Home Improvement Credit. As of 2025, you can claim 30 percent of the cost of the upgrades (with certain annual limits based on the improvement type).
Every sum of money you receive – even your tax refund – has a variety of ways by which it can affect your overall tax situation. So, it’s important that you plan the tax implications of how you use this extra money (which I’m here to help you with):
calendly.com/postalplustax
In your corner (for the long term),
Dominic Nguyen