It is tax season. Tax season is the time of year where you might be expecting to receive a nice lump-some check to do with what you please. If you're unsure of what to do with your check, here a few great ideas!
1. IF YOU HAVE DEBT, USE YOUR TAX REFUND TO PAY OFF YOUR DEBT!!
The last 3 years I have used my tax refunds to make large payments towards my school loans. I have paid off over $10,000 worth of school loans. Paying off loans not only reduces your overall debt and increases your net worth, but it also frees up more money for you to use throughout the year (if you have more debt, I'd suggest putting the extra money toward that)
2. Make a payment toward your Retirement Account.
You can put up to $5,500 if you're younger than 50 and $6,500 if you're older than 50 towards your IRA per year. If you put it all in from your tax refund, you can use the rest of your wages in other places. Click Here for details about federal guidelines for IRA Contributions.
3. Invest your money.
After filing your taxes, you're might receive a nice big check. You've lived without that money for the past year, you can live without it for longer. Invest your money to make it grow. There are many companies that offer financial advice, money management, and investment opportunities. By investing your money and waiting just a little bit longer, you can increase your tax return and use it to get something even bigger.
4. Invest in your children
College is expensive. I'm sure you came out of College with some debt. You can help out your children by investing in their future education. Start a 529 plan for your children, which is pretty much an interest building savings plan for your childrens' tuition payments. Click here for IRS restrictions and FAQ about 529 plans.
5. Buy a Car or Start Saving for a Car.
Notice how I didn't say "make a large down payment on a car". I said "buy" a car or "start saving" for a car. These days, it seems like everyone feels like they need to have a car loan. I admit it, I'm guilty of this at this very minute. I have a car payment and I regret that I bought that car just about every time I think about it. Lets say you currently drive a 2004 Pontiac Grand Prix with 130,000 miles on it. Your car is worth approximately $2,400 for a trade-in. You received $2,000 for your tax refund. You can afford a $4,400 car, which still wouldn't get you much at all. However, if you plan on getting a car and making $400 a month payments. After 1 year you would have enough money to purchase a $10,000 car. That greatly opens up your opportunities AND you WOULD NOT INCUR MORE DEBT!
6. Use it to buy something nice for yourself or family
Anything can really fall into this category. You can take your family on a nice vacation, purchase that new big screen TV the kids want. What ever you do with your tax refund, I suggest not taking on any debt.
#taxreturn #savingmoney #debtfree
**Please note I am not a certified personal finance manager, I am speaking from personal experiences and research conducted. I am not responsible for any financial decisions you make in the future**
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