The Finance Bible podcast is your ultimate resource for financial freedom, personal growth, and business success. Hosted by Zeke Guenthroth and Oscar Don, this podcast is designed to help you achieve your goals through actionable insights, expert advice, and practical strategies.
Each week, we bring you fresh episodes packed with valuable tips on a wide range of topics, including investing, property investment, saving, budgeting, shares, cryptocurrency, inflation, interest rates, wealth building, and debt management. But that’s not all—we also dive deep into personal growth strategies and business success tips, helping you develop the mindset and skills needed to thrive in every area of your life.
Whether you’re just starting your financial journey, working to grow your business, or striving to improve personally, The Finance Bible equips you with the tools to create lasting success. It’s more than a podcast—it’s your guide to building a better future.
DISCLAIMER: The information provided in this podcast is general in nature and does not constitute personal financial advice. It does not take into account your individual objectives, financial situation, or needs. Always consider whether the information is appropriate to your circumstances and seek advice from a qualified professional if needed.
#83 How to utilise your tax refund as a financial game-changer
•Zeke Guenthroth and Oscar Don
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00:00 | 16:45
Ever wondered how to turn your tax refund into a financial game-changer? Discover powerful strategies on the latest episode of the Finance Fireball podcast. We promise that by the end of this episode, you'll know how to transform your tax refund into a robust emergency fund and a tool for conquering high-interest debt. We break down the essential steps to build financial security, offering you practical tips to manage credit card, personal loan, and student loan debt effectively. This episode is your guide to making smart, informed decisions that enhance your financial stability and well-being.
In the second half of our discussion, we unlock the secrets to future financial planning, focusing on the magic of compound interest and the benefits of strategic mortgage repayments. Learn how small investments today can lead to significant long-term gains, and why it's crucial to address expenses like car insurance and home repairs before they escalate. We also share insights on using tax refunds to reduce mortgage interest—especially useful if you're considering a switch from fixed to variable rates. Lastly, we tackle the delicate topic of managing finances during times of grief, stressing the importance of having a will to ensure smooth asset distribution. Subscribe, share, and equip yourself with the knowledge to navigate your financial journey with confidence.
For any enquiries or to connect with Oscar, Zeke, or their company, Asset Road, listeners can visit the following links:
The advice shared on The Finance Bible is general in nature and does not consider your individual circumstances. The Finance Bible exists purely for educational / entertainment purposes and should not be relied upon to make an investment or financial decision. If you do choose to buy a financial product, read the PDS, TMD and obtain appropriate financial advice tailored towards your needs.
Welcome back to another episode of the Finance Fireball podcast. Zeke here and your co-host, oscar. But before we get into it, please note that nothing in this podcast should ever be considered as personal financial advice. Of course, if that is what you are seeking, reach out. We'll get you in touch with the correct professionals. Get the job done properly, sit back, relax and enjoy the show. Let's get into it, and we're back, sitting alongside Zeke, and today we will be talking about something which is quite on trend at the moment.
Speaker 1:
It is, as we speak, midway through July and quite a few people probably in the process of putting in their information for a tax return. It's that time of the year. It's a good time when you're getting money back. If you are spending the money, it's a bit tough. But we just thought we'd jump on and make an episode of what you may want to spend your you know your tax refund money on. If you are the lucky ones to be getting a refund because you may get the money, you may be overwhelmed with it. What should you do with it? Generally speaking, if you get given money, sometimes you think it's free money and you just spend it. So are there better ways to use it to align with your goals or whatever you need to do in terms of getting that next level up in your finances.
Speaker 1:
So we'll just start from the top. What do you have to start us off with, mate? Well, well, well, well. First of all, what a beautiful day it is is we are overlooking surface paradise here. We've got a nice, nice hotel room literally right on the waterfront, so I cannot complain. Yeah, we're in that hotel room service. Um, she's watching a couple of yeah, I saw that chase each other on a balcony, um, in peppers, and they're just running at night. That is not ideal. It's pretty funny window cleaners probably having a bit of a giggle over there, but you know what? They just ran inside.
Speaker 1:
What ways do you want to spend your tax return? Hey, Number one for me in terms of helping people out would be building up a bit of an emergency fund. I do love an emergency fund. We like to call it a bit of rainy day protection. Yes, as Scotty Pape. Basically, you know, the average tax return refund in Australia is about $2,008. And with that you can build a bit of an emergency fund there. So you know, you can just put it aside and keep it there, maybe in an interest account where it's earning a little bit of money. For you it's not going to be significant, but anything helps in this day and age, you know, I can just sit there and build up and compound while if anything happens, it goes wrong. Then you've got a bit of money there to take advantage of and it eases that stress off you a little bit.
Speaker 1:
Yeah, and we found in COVID as well emergency funds are so vital, especially if you're a family, like a parent you've got to look after kids, et cetera. Or you've got a mortgage because if you lose your job you don't really want to dive into your savings. If you have an emergency fund, you'd want to utilise that because that is literally what it's for. So, job loss, like medical emergencies, car breaks down, um, you know, dental, just anything which are unexpected expenses, yeah, even as a parent, like if your kid breaks their arm, yeah, take a couple days off, work. You don't have sick leave, you know, and it's not something you, you really plan for because it's an emergency fund. You don't think it's going to happen, but it's until it does happen and you don't have the balance. That's when you really kind of regret not saving a bit of money, even if it's $50 a week or $20 a week Like it can be nothing. As Zeke said there, you know, finding a fund which can give you interest each month on that and just a little bit of growth can help it push up, especially if you do put a bit of your, your tax refund into it. It's, it's. It would be a good idea. Yeah, and even if you're a renter and you know you need to pay a new bond or something that'll go a long way, your insurance premium might go up on your home or might go up on your car, which is happening, happening a lot right now. Insurance is getting more and more expensive, so having that money there could help you with things like that.
Speaker 1:
Next one Don throw one out Paying off debt, especially high interest debt. So this is a I feel like this is my number one only if you have debt. Actually, if you don't have debt, emergency fund would be number one for me, but we're in a country where a lot of consumer debt is exposed. Generally speaking, younger individuals from, let's say, 20 to 40, like to get a credit card and just keep slapping that on the FFOS machine, making sure you keep your debt accountable, like figure out how much you have, don't let it go out of hand. But if you do get a refund, paying that off is a good idea. Like for myself, that's what I've actually done for my tax refund this year in the process of closing one of my credit cards. So, closing that out, paying it off, get it done. It's a good idea because sometimes you just get hit with interest and then there's another 300 bucks on it. So if you can get it down when you've got a bit of extra money coming through and make sure you're planning accordingly, it's a good idea.
Speaker 1:
Yeah, paying down the high interest, even if it's car loans that are on a not favourable term, just any kind of loan. Holidays a lot of people have personal loans at the moment, which is not ideal and even student loans, like people out there with help or HECS or whatever you want to call it then you know you could just pay a quick couple grand off that and help pay that down. You might not have much left. You can finish it off. The next one for me would be doing something in which it will benefit you long-term and or give you additional tax benefits. If your cash flow is fine day to day.
Speaker 1:
You could look at doing something like putting that refund into your superannuation as a concessional contribution. Basically, what that means is that comes off of your assessable income for that financial year and then you can get a bit of a tax refund out of it for next year and you can just keep doing the same thing and also build up your super at the same time. Yeah, build up the super, get a lower tax rate environment, allow that compound growth to happen over a long time. Like if you're on the average wage, you know 80 grand a year, and your super's going up maybe $9,000 a year in terms of contributions. If you throw your tax refund in of about two grand, then you know that's another 20% in that one year. You do it again next year, it's another 20% and that 20% just compounds and compounds and eventually your super will go up very drastically.
Speaker 1:
Yeah, once your super goes up as well, it allows you to have options to invest within your super. You've probably heard our episodes on investing in property within a self-managed super fund. But once you hit a certain threshold in your super balance, that becomes available to people who have done that and then you can just leverage and purchase property in there Like it's a win-win. Purchase a property, contribute, help you with your tax yeah, lots of things you could do in there, and obviously that varies. If you do have debt and if you don't have debt, or if you've got an emergency fund or if you don't, there's different layers to it, like if you've got other things to pay off first. I wouldn't recommend just throwing into your super and letting the debt go freely, but figure out what's more important to you in terms of the order of what you're wanting to look at.
Speaker 1:
Yeah, or just get actual professional advice. By no means are we saying here are the things you should do. No, here are some different things that you can do. People yeah, reasons to do them, reasons not to do them. People just put it in their spending and just spend it. Go out on a nice dinner, which is also sometimes good If you want to take someone on a date. You know, get a bit of a tax break, fun happy days just set. You know, you get a bit of a tax break, fun happy days. You're set Free dinner.
Speaker 1:
You could even be doing what a certain man might do and put it in a specific account. You could be saving up for an engagement ring or something. Yes, you could. Actually, whoever would be doing that, that's what you could do. You could, you could, you could put it in there. You could save it for any big purchases. Really, yeah, you never know. Really, yeah, you never know. Yeah, you could, you definitely could. You could throw it in the engagement account and that goes back to investing investing for another day. You can invest this extra cash to achieve your financial goals, financial growth, your investment journey. Get it. Get it underway. If you haven't, or just continue investing in shares or property, whatever it may be, because we've done the, or if you haven't done it.
Speaker 1:
Compound money growth calculator on Money Smart Great tool, that one, probably my favorite calculator on the web. Have a little play around on that one and figure out over 30 years, or however long you have until your retirement age or when you want to retire, what a little bit let's say, 50 bucks a week or whatever refund you get can contribute to your overall money goals, because I was playing around last week, I play around every week actually on it and even like 50 bucks a week invested can literally give you like a 300, $400,000 difference if you start now compared to starting in 10 years time. Yeah, it goes a long way. So if you're doing two grand a year from your tax refund, then, yeah, just average it out the whole year like dollar cost average. So it's not all one large lump sum investment, it's so I love it Even when I was in Africa and I was speaking to one of Zoe's cousins about it and I just whipped up the calculator at dinner.
Speaker 1:
For those of you who don't know, zoe is oscar's partner in life. Yes, that's true. Yes, keep going with your story. I just whipped it up and popped in some numbers and I was like geez, this calculator is actually unbelievable. It's a fun character, it is so good and you just play around with it. So many different variants, like you can pop in. If you've got this super amount compared, you can compare two different options in like ages, like let's start now at 26. What if I wait five years at 31? Yeah, what's the difference? Different amounts, different growth rates, different fees and stuff. What's the difference in 30 years? Yeah, and I'll tell you what. Even like waiting two years, it's a big difference, oh, huge. It is insane what compound or compounding can do. Yeah, even with small amounts Like two grand a year is by no means a huge amount of money, but it compounds so much over the long term and, yeah, you can literally throw that into anything you want, as long as it's getting you a return.
Speaker 1:
The next one along is tackling maintenance costs. Oh, it's an interesting one. We all have them, those annoying little things that just come up and you know you're like, oh yeah, I've got to pay that at some point. Oh, yeah, I've got to do that at some point. And they're just little things that you're like, oh, it's not urgent, like it's not pressing enough for me to do it, but you're like, oh, I don't have to do it now, so I'll put it off. And we all have them. You know whether it be what's an example, I've gone brain dead. Car insurance yeah, car insurance. You might be paying it monthly. You can try to get an annual payment for it. It could be rego. You might be doing it like every three months or six months and you could be doing it annually. It could even be going to do something health-wise, like you've been thinking about getting new glasses or something. You can't afford it day by day, and you're like, oh, I need to do it, but you know I don't really have the money for it.
Speaker 1:
Things in the home, like you might be needing a new microwave or a new oven or something, but it's not urgent, so you just keep on going. Um, you know, it could be a pair of shoes or something that you you've worn down and they're at the point where you're like God, I need some of your shoes. The sole's gone, but again, it's not urgent. You've been postponing it. So anything like that that you could do. I did have other examples earlier, but I've completely gone blank. You can come back to it, man, yeah, health insurance, anything like that, that's not urgent, but you do it. There's always some things that are in the back of your mind or you see it and go oh yeah, I need to do that, but you just can't bother. Yeah, there's always something.
Speaker 1:
Another one which I think is well it's targeted at homeowners and if you've got a pretty hefty mortgage is utilising your refund to offset your interest. Put it in your offset account. So, depending what you have in terms of your tax refund, I believe anything will help you with it. Obviously, if you've got a higher amount, it will help you more substantially if you've got a lower amount of a refund but help you minimize the interest you are paying on your mortgage. It may be a good idea if you are struggling day-to-day at the moment, especially for those individuals who are coming off like a fixed interest rate to a variable rate. Especially if they locked it in a couple years ago it may be stinging them, so anything will be able to help them. So if you get a nice tax refund could be a good idea to pop it straight there and then you're paying a bit less per week for your repayments and you know it can help you put that money elsewhere, like go out for a nice date night once a week, oh yeah. Or just put it in, share it like options are endless. But offsetting the mortgage is a potential idea for those people who are struggling at the moment with the high amounts. Absolutely.
Speaker 1:
You could create a will, which is another thing. I mean that's kind of part of the maintenance I was talking about, but big enough to be a separate point on its own. So a lot of people out there don't have wills or they haven't updated it. In a decade or 10 years they might have three or four children now. They had none at the beginning when they did it with their partner originally.
Speaker 1:
Even if you're single, you know, having a will is not a terrible idea, because if you've got debts or you've got a bit of money or whatever, who do you want to kind of be responsible for that? That's like an emergency fund, something not many people think about until it's too late. That's exactly right. Like some people are, literally, when they're on their deathbed they like I've seen photos or I know actually people whose family members have had this like when they're in their deathbed in the hospital, they actually get their will written up because they don't have one. Yeah well, they amend it right there and there. Yeah, and it's like, well, they're not obviously thinking 100% because they're pretty crook and it's probably not the thing you'd be wanting to do. If you're literally on your deathbed, whoever was the last person there to check on them is fresh in their mind as well.
Speaker 1:
Yeah, don't think about, especially if you're on the younger side of age, that it can creep up on you. It's just good to plan, especially if you've got a partner or a family. Yeah, yeah, otherwise it just turns into absolute chaos. You've got legal battles left, right and the center. It delays it so much it makes the whole grieving process harder. And if you've got kids who you know, let's say siblings, say a few sisters, or, or four or five, haven't you got in your family but four, five, I've got four siblings, yes, so there's like a family of five kids.
Speaker 1:
And then let's say, the parents died and they didn't have that will. Well, if the kids don't get along, it's going to be an absolute shit show. Yeah, that's right. If mom and dad carved it tomorrow without a will, it became, oh, it'd be horrible because everyone would be fighting for it. Like, if everyone was fighting for it, if everyone had their strong personalities, it'd be literally chaos and it'd ruin relationships. Yeah, I think we'd be pretty chill.
Speaker 1:
I'm not using you as an example, mate, don't you stress about that. No, I do hope that I'm in charge of it, though, because obviously I'm the best option. Mom and dad, if you uh happen to tune in, go update it, no wonder, put zeke number one and I'll distribute it and have your best interest at heart. Oh, what a man. As always, that's how I operate. You know, if you've got and especially in families where there's like two children, like having them 50, 50 huge problem. I've mentioned this before. I've seen people delay that like 10 years because they just want to fight about it non-stop. Put a third person as someone to help distribute things and sort it out. Yeah, I think for mum's will, because it's two of us. She's got a. I think it's her mortgage broker, her accountant, who's going to be in charge of distributing it instead of one of us.
Speaker 1:
Yeah, which is so much better. Yeah, especially if, like you're grieving, like you don't really want to think about it or be in charge of that at the time. It just adds a bunch of drama. Oh, it does. We hope you enjoyed the episode. As always, you know exactly what to do. Hit that follow button. Subscribe whatever platform you listen to this podcast on. Also, share it to friends, family, co-workers, whoever you think may benefit from it. No-transcript.
