Use That Tax Return to Put Out Your Financial Fire

Smart Money Moves That Beat Back the Flames and Build Wealth

For a lot of families, tax season ends with a refund. Maybe it’s a few hundred bucks. Maybe it’s a few thousand. And while the IRS isn’t exactly a savings account you’d want to rely on, getting that direct deposit into your checking account feels like sweet relief.

But here’s the question: what happens next?

Because for too many people, that refund money disappears faster than a structure fire with no water supply. One minute it's there, the next minute it’s fueling impulse buys and takeout dinners. And before long, you’re back to scrambling with no progress made.

If that sounds familiar, you’re not alone—and it’s not your fault. Most folks never got a playbook for how to use windfalls wisely.

So let’s fix that.Let’s take this year's tax refund and use it to put out the biggest financial fire in your life.

Step 1: Size Up the Scene

Before you do anything, you’ve got to assess the landscape. Think like a firefighter: where’s the fire hottest? Where’s the structure weakest? What needs your attention before it spreads?

Your financial fire might look like:

• High-interest credit card debt

• No emergency fund

• A car that's one repair away from disaster

• Living paycheck to paycheck

• No savings for the next big life move (buying a house, sending a kid to college, starting a business)

You don’t need a dozen fancy spreadsheets to figure this out—just clarity on what’s most likely to put you in a bind if left unchecked.

🔥 Tactical Tip: Write down your top 2-3 financial stressors. Be brutally honest. This refund is your firehose—let’s aim it with precision.

Step 2: Kill the Worst Flames First (a.k.a. High-Interest Debt)

If your financial fire includes credit cards or personal loans with double-digit interest rates, that’s where your tax refund should go—no question.

Paying off high-interest debt is like dragging hose into a structure fire: it’s not sexy, but it’s the only way to stop the collapse.

Here’s why it works:

• A $2,000 refund applied to a credit card with 22% APR is like earning a guaranteed 22% return. That’s better than the stock market, and you don’t pay taxes on it.

• Once that balance is gone, your monthly cash flow opens up, which means less stress and more flexibility.

🔥 Tactical Tip: Use the avalanche method—pay off your highest interest debts first while making minimum payments on the rest.

Step 3: Build a Firebreak (Emergency Fund)

Once the high-interest debt is out of the way (or if you don’t have any), your next priority is building a buffer. That’s your emergency fund—a cash stash that keeps small sparks from turning into five-alarm disasters.

Ideal goal: 3–6 months of core expenses.Realistic start: $500–$1,000 in a separate savings account.

This isn’t investment money. It’s “my car broke down, and I don’t want to use a credit card” money.

🔥 Tactical Tip: Open a high-yield online savings account with no debit card access. Make it inconvenient to raid.

Step 4: Invest in Fire Prevention (Future You)

If your debt is low and your savings are steady, now you’re in position to stop fighting fires and start building something.

Your tax refund can fund long-term plays that compound over time:

• Roth IRA contribution: Up to $7,000 in 2024 ($8,000 if over 50). Grows tax-free. Flexible withdrawal options.

• 529 plan for your kids' education: A way to fund their future and get potential state tax deductions.

• Brokerage account for wealth building: Not tax-advantaged, but more flexible than retirement accounts.

Even putting just $500–$1,000 into one of these vehicles can change your trajectory—especially if you automate contributions moving forward.

🔥 Tactical Tip: Think of investing like station drills. You don’t see the payoff right away, but when the call comes in, you’ll be glad you trained.

Step 5: Fix the Structural Weaknesses (Insurances, Wills, Estate Planning)

This step is less glamorous—but it's essential.

Your tax refund can help you finally take care of the financial fire doors in your life:

• Life Insurance: Especially term insurance, which is cheap and critical if people rely on your income.

• Legal Docs: A simple will, health care proxy, and power of attorney.

• Homeowners or renters insurance audit: Make sure you’re not underinsured (it happens all the time).

These things don’t feel urgent—until they are.

🔥 Tactical Tip: If you’re a firefighter with dependents and no term life policy, fix that first. It’s a professional responsibility.

Step 6: Rebuild Smarter (Spend with Purpose)

Not all your refund needs to be “responsible.” But if you’re going to use some for fun, do it on purpose. A budgeted splurge is a reward. An untracked spree is a firestarter.

Split idea: 70% to serious financial goals 20% to short-term needs 10% to guilt-free joy (takeout, concert tickets, your favorite bottle of whiskey)

That last 10% might just keep you motivated to keep putting the other 90% to work.

Step 7: Set Up Next Year’s Fire Line (Adjust Withholding + Automate)

If you’re consistently getting big tax refunds every year, that might mean you’re overpaying Uncle Sam during the year—effectively giving him an interest-free loan.

Instead:

1. Use the IRS withholding calculator to tweak your W-4.

2. Redirect that freed-up money into monthly savings or debt payoff.

3. Set up automatic transfers—make next year easier by default.

   
   

🔥 Tactical Tip: Many firefighters have side gigs. If that's you, keep your books tight and review your quarterly estimated payments. No one likes a surprise tax bill.

Optional: Fund the Big Leap (Starting a Business or Side Hustle)

This one isn’t for everyone—but if you’ve been thinking about starting a business, that refund can be the spark that gets it going:

• Set up an LLC

• Get a basic website up and running

• Buy your first round of inventory or gear

• Take a class that teaches you the ropes

Whether it’s handyman work, photography, or a niche product idea—if you can turn that refund into a revenue stream, you're multiplying its value 10x.

🔥 Tactical Tip: Talk to a tax pro before you start. A little setup can save a lot of IRS headaches later.

Final Word: Don’t Let That Refund Go Up in Smoke

That refund you just got? It’s not just cash—it’s capacity. It’s an opportunity to get out of reactive mode and start taking control of your financial life.

You’ve already done the hard part—you showed up, you earned that money, and you paid into the system. Now make the most of what you’re getting back.

Use it to put out your biggest fire. Use it to lay the foundation for something better. Use it to build a financial future that’s fireproof.

And if you’re not sure where to start, you don’t have to do it alone.We help firefighters and their families make smart financial moves all year—not just in April.

Let’s make your refund work as hard as you do. Book a free planning call and we’ll walk through the smartest way to use this year’s return—step by step.

Rightsize My Retirement Plan

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Disclosures:Carlson Planning Company (“Carlson Planning”) is a Registered Investment Advisor registered in the Commonwealth of Massachusetts. The information presented herein is for educational and informational purposes only and is not intended as tax, legal, or investment advice. The strategies discussed may not be suitable for all individuals and are not intended to be a substitute for personalized financial advice. Readers should consult with their own tax advisor, legal counsel, or financial professional before taking any action based on this content. Nothing in this communication should be interpreted as a solicitation or offer to buy or sell any securities or investment products. Any references to investment performance or returns are purely hypothetical and are not indicative of future results. Investing involves risk, including the potential loss of principal. Past performance is not a guarantee of future results. Retirement planning, tax strategies, debt management, and insurance considerations are highly individualized and should be evaluated in the context of each client’s goals, risk tolerance, and time horizon. Carlson Planning may recommend third-party products or services, but does not receive compensation for such referrals unless explicitly disclosed in writing. For more information about our firm, including our services, fees, and conflicts of interest, please refer to our latest Form ADV Part 2A, available upon request or through the SEC’s Investment Adviser Public Disclosure (IAPD) website.