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April 15th has now come and gone, which means tax season has once again come to a close. At least for most of us, others like my boss are working on a plan to pay $1400 back to the government. We waited longer this year to file our taxes because we thought we were going to have to pay in, but after sending our forms to a professional we're going to get a whopping $3 tax refund.
I was actually really excited about this, because it means I gave the government just the right amount of money throughout the year. They will get no free loan from me. But I have to admit I am jealous of all these people who get big refunds. Just imagine what you could do with that extra money.
Pay Off Debt - Using your income tax refund to pay off debt is probably the smartest thing you can do. This is money that you weren't expecting to have, so you shouldn't miss it. Anytime you can pay a large amount on debt means one big step closer to financial freedom.
Put it into Savings - Getting a large refund is a great time to start a high interest savings account. Unfortunately, high interest only means 1.5-2% right now. That means your $1000 in savings will earn you $15-$20 over the course of a year. Still better than blowing the money on something that is going to lose value.
Add Value to Your Home - Have you been wanting to paint your house, put down hardwood floors, or do some landscaping? Consider using your refund to fund these home projects. Why? Not only will it usually add value to your house, it also allows you to do these things without going into debt.
Go on Vacation - I know many financial experts will gasp when they see this recommendation, but a vacation has great value to some people. I'm one of them. I love traveling. However, with that said, I believe paying off debt and having an emergency fund should be our number one priority. But, if you've already taken care of that, treat yourself to the vacation of your choice.
What will you do with your refund? Did you even get a refund? My $3 is going directly towards debt, I'll show you car payment.
I was actually really excited about this, because it means I gave the government just the right amount of money throughout the year. They will get no free loan from me. But I have to admit I am jealous of all these people who get big refunds. Just imagine what you could do with that extra money.
Pay Off Debt - Using your income tax refund to pay off debt is probably the smartest thing you can do. This is money that you weren't expecting to have, so you shouldn't miss it. Anytime you can pay a large amount on debt means one big step closer to financial freedom.
Put it into Savings - Getting a large refund is a great time to start a high interest savings account. Unfortunately, high interest only means 1.5-2% right now. That means your $1000 in savings will earn you $15-$20 over the course of a year. Still better than blowing the money on something that is going to lose value.
Add Value to Your Home - Have you been wanting to paint your house, put down hardwood floors, or do some landscaping? Consider using your refund to fund these home projects. Why? Not only will it usually add value to your house, it also allows you to do these things without going into debt.
Go on Vacation - I know many financial experts will gasp when they see this recommendation, but a vacation has great value to some people. I'm one of them. I love traveling. However, with that said, I believe paying off debt and having an emergency fund should be our number one priority. But, if you've already taken care of that, treat yourself to the vacation of your choice.
What will you do with your refund? Did you even get a refund? My $3 is going directly towards debt, I'll show you car payment.
5 comments:
Kind of investing in our home, we used our tax refund to finally get our new bedroom furniture (was still using furniture from college). Got a new bed, mattress, nightstands and a dresser for under 4K. One of our best investments ever.
Wow Congratulations! on being so exact. Don't be jealous you were smart and got your extra money all year. Just remind yourself that if you were doing all of those things you listed throughout the year with that money instead of overpaying the government you actually ended up with more then everybody getting a big refund. You benefited from lower interest payments over the life of your loan and greater interest income than if you waited a year to put it into savings.
Ours went into savings. I filed early because we were due a decent chunk of money back, and (at the time) we had twins nearing their due date. Since then the twins have come and they're eating us out of house an home. Therefore I suppose you could say our refund went to baby formula and diapers. :-)
We put the whole thing towards debt this year! Next year we're either going to invest it or put it in savings cause our debt will be all paid off by then (excluding mortgage).
El Cheapo: Good deal on getting the furniture. That's one of the next things on our list as well.
T: Thanks for the encouragement. To be honest it was more luck than planning.
Todd: Congratulations on the twins. I'm sure all the diapers and formula are worth it.
Amata: I hope to be at the same place you are next year. Paying off the last of our debt and start to save more.
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