I actually look forward to filing taxes each year, and I do it as soon as I possibly can. I just need my W2 (this year available online) and my mortgage statements; everything else like charitable donations and interest earned, my Quicken program tells me.

I know, I shouldn’t allow a big refund. I know, I should adjust my withholding. I know, it’s my money and I loaned it to the government all last year, interest free. Silly me! But I just love my tax refund.

Why? Because it allows me to do things I otherwise might not. My refund comes in a lump sum, and like other lump sums (bonus, extra paychecks, etc.) it’s out of the ordinary. It’s an occasion to be more thoughtful than if that same money came as a tiny trickle each pay period.

Irresponsible? Undisciplined? Maybe. But this is one case where I find a mind game with myself works better than careful, frugal, prudent planning each week. I am secretly saving all year, never missing the money, and then boom! Mid-February (at the latest) a nice lump sum lands in my checking account.

Of course, it’s what I do with that lump sum that makes all the difference. This year, between my federal and state refunds, I will be able to pay off my Toyota Prius a full two years early. That’s a monthly $464.14 car payment wiped out, freeing up that cash for other purposes. What particularly tickles me is the $47.47 per month in interest over 24 months that I won’t be paying. That’s saving a whopping $1,139.28.

Now coming up, first paycheck in March, my company hands out the annual bonuses for the previous year. Again, because it’s a lump sum, it allows me to be more dramatic and make a noticeable difference in one fell swoop.

Rob and I decided that the smartest thing for the bonus this year is to pay off his last credit card balance, in full. Last year Rob wisely transferred the balance to a card with a promotional 0% interest rate, so for many months we’ve been making quick progress dumping that debt. But the 0% rate expires in a few months, jumping up to 12 or 14%. At that point most of the monthly payment will go to interest, not principal. What a waste!

In a recent post Paula pointed out what a great feeling it is to pay off those darn credit card debts that hold us back. I can’t wait! No car payments, no credit card debt. Hurray for lump sums, and hurray for financial freedom!