Hey there! Today, I want to share some tips from my friend Jeff on how to use your tax refund wisely. Jeff started his career at a private wealth management firm but now runs two full-time blogs, DollarSprout.com and Breaking The One Percent, aimed at helping millennials and young entrepreneurs grow their online businesses and manage their finances.
Every year when tax season comes around, I take a moment to review my personal finances. Most years, I get a refund between $500 and $2,000 from the IRS. Usually, I use some of it to pay off student loans, contribute to my IRA, or boost my emergency savings. And yes, I sometimes treat myself to something fun.
In 2014, I decided to do something different with my tax refund. I invested it in starting my own online business. I had only been working for a couple of years, but I was already tired of working for someone else. The office politics and the constant push to bring in more clients were draining. I realized I wanted to be an entrepreneur.
I started researching successful online businesses and discovered blogging as a viable option. Initially, I didn’t know how blogs made money, but then I found out about “Income Reports” and saw that many bloggers were earning substantial amounts. I was hooked on the idea.
Blogging appealed to me because it allowed me to help people on a larger scale, work flexibly, avoid the pressure of getting new clients constantly, and potentially make more money than a corporate job. I knew it wouldn’t be easy, but I was determined to try.
In 2014, my tax refund was $800. I had already saved enough to go almost a year without income, so I used the refund to kickstart my online business. Here’s how I spent the money and some advice for anyone looking to start their own online business while still working a 9 to 5 job:
1. **Domain Name and Hosting for 1 year: ~$100**
– Choose a simple, easy-to-remember .com domain name without numbers or dashes.
– We picked a formal-sounding name, VTX Capital, but later rebranded to DollarSprout.com for a more blog-friendly name.
2. **WordPress Theme: $50**
– A theme is a design for your blog, and you don’t need to know coding to use one. A paid theme is a worthwhile investment for a professional look.
3. **LLC Registration Fees: $100**
– We registered our blog as an LLC early on to do things by the book. Consult a lawyer if you have questions about setting up your blog as a business.
4. **Lawyer Fees for Reviewing Our Operating Agreement: $200**
– This step might not be necessary for everyone, but it was important for us to have a clear agreement since we were partners.
Total cost for us to start an online business: $450. You can spend less, but we treated our online business as a long-term project.
Fast forward to now, starting an online business was the best decision I ever made. After investing my tax refund and spending a few months writing and learning, I quit my 9 to 5 job on August 1, 2014. There have been ups and downs, but our business has grown, and I couldn’t be happier. I now make a comfortable living from my online business and work for myself, which is incredibly liberating.
If you’re unhappy with your current job, it’s up to you to make a change. Jeff and I have learned a lot about blogging and online entrepreneurship, and we share our knowledge on BreakingTheOnePercent.com to help others grow their businesses.
So, what are you planning to do with your tax refund this year?