2013 Taxes Already?!

I know what you’re thinking — “Don’t you mean 2012 taxes already?”

Nope, I mean taxes that I will pay in 2014 for tax year 2013 (assuming the Mayans are wrong about tomorrow, of course).

This is highly relevant today, especially for those of us who are on disability or get Social Security or work for ourselves and don’t have taxes automatically taken out of our paychecks.

I recently had a PRG where one member of my team asked me about how much I would save each month for taxes next year because certain situations were changing. I had no idea and just guessed at an amount.

When he responded with great concern, it struck me that I was in terminal VAGUENESS! And I thought I was over that after three years working DA H.O.W.

As I use TurboTax to do my taxes, I went ahead and bought the newest version and, even though it is not for tax year 2013, my husband and I ran a few scenarios to create a “worst case.” Now, I have a better picture of what I need to save each month and it is more than I thought but far less than I feared.

The way I work my program is to chunk all my bills into monthly amounts and accumulate. For instance, I had a category for TurboTax and enough money accumulated to buy it now. It is a fantastic method for me and really the way DA advises we do our spending plan (see The Numbers: One Approach pamphlet from DA).

To be honest, I’ve been in “la-la” land about taxes even for this year. Luckily, we were in time to assure that I had enough because I got a few extra chunks of money. I don’t know why I forget about this responsibility we each have and just think all the money I receive is mine to use.

But I am certainly grateful to my PRG team for ensuring that my lapse is not forgotten by them. It is one more example of why I need this program and cannot do it on my own.

My thought (when I thought about it at all) was that I would just take whatever I needed from my savings. But that attitude, they assured me, is not sober thinking. Yes, in fact all the money is in one pot. But the key to successful use of the spending plan, at least for me, is to have clear boundaries around the money. So I don’t use money for shoes that needs to be used for food. And I am clear, at all times, how much money is available for all my needs … and wants to ensure I don’t debt by overspending.

I have a $1,000 contingency fund that is currently fully funded in case of an emergency. Say, my dog gets sick and it’s more than I have in my pet category, or some other unexpected catastrophe occurs.

My prudent reserve is at about four months of living expenses, but for me, as I don’t anticipate being able to go back to work, it is essentially my retirement savings, which, for that purpose, is quite small.

So it is essential that, in order to live within my means, I don’t look at that savings as money from which to draw easily. And in order to do that, I must, in good conscience and clarity, create categories for everything I can anticipate so as not to have to do so.

That is why I must create a specific category for accumulating taxes. It’s part of my commitment to stay out of the fog of vagueness. Frightening as the idea was to cut down my spending in order to fund my tax category, we were able to somehow make it work almost painlessly. It was a miracle that I could never have figured out on my own.

So, once again, I implore you to have PRG’s to help you work this program no matter how seasoned or new you are. No matter how long you have been working this program, we are all still sober with money just one day at a time … and still need the support of others at times to help us see clearly.

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