Hey /r/personalfinance, I'm in need of some advice from random internet strangers re: what should I do with my (unexpected) tax refund.
The Situation:
I have a bunch of debt. I'm not living beyond my means or anything, it's just the cards I was dealt (divorce & subsequent legal battles). Anyway, current situation:
- CC1: 10K on 0% promo until Nov 2017
- CC2: 6K on 0% promo until Sep 2017
In addition, I still owe my lawyer $4K. That's relevant b/c it looks like I'm going to need him again. I need to pay him off first. Plus, I just don't like having that hanging over my head.
(This makes me sound like I can't stop fighting w/ my ex wife, I know. That's not the case. The only reason I'm thinking about going back now is b/c I have a slam dunk case to reduce my ridiculously high child support b/c one of my kids is living with me full time now. I'm only going in again if a) it is a slam dunk and b) it's got a good ROI).
The Plan
This spring, everything should come together for me. I've got an ESPP purchase happening at the end of this month that should get me ~$6K, and I received a restricted stock grant last May that will vest this May and be worth about $20K. My plan was to sell what I needed to to pay everything off.
Side question: Is it better, from a tax perspective, to cash out ESPP or RSUs?
The Wrinkle
The US tax withholding system must be one of the pinnacle achievements of western civilization. I can't think of anything more complex that evokes so much emotion. I've been fighting with it for years. Usually I lose big, this time it peasantly surprised me.
My issue has been that in past years when I've sold ESPP, taxes are not withheld and I get hit at tax time. I've had to pay a couple of grand more times than I like. This happened last year, so I updated my withholdings to hold a bit more. Well, I sold ESPP again last year, at a loss this time (couldn't have predicted that), and when I did my taxes last night I found that I'm getting ~$4K back. I know it's a "free loan to Uncle Sam", but I thought I had avoided that.
The Question
After only very briefly thinking about doing some home improvement projects or buying a good used car, I'm trying to figure out what to do with this cash I hadn't expected.
My first thought was to pay credit cards, but those are interest-free until later this year (after my ESPP/RSUs come in). Then I thought I should pay my lawyer off. Then, I thought that maybe I should stash that away in my Roth IRA b/c I have until April 15 to contribute to it for tax year 2016.
I'm kindof leaning toward the latter. Thoughts?
Submitted March 05, 2017 at 10:33AM by leons_getting_larger http://ift.tt/2mbcAPe
