Sensible Ways To Use A Return
Being sensible does not sound like much fine but sometimes you have to put your grown up pants on. It is important to plan for your future and to take care of your financial health and at the end of the day, you will feel better for it. Here are 10 great ways to use your return that will leave you feeling good once the money is gone.
Pay Off Your Credit Cards
That credit card debt is killing your finances. The average credit card interest rate is right around 17% and some rates can go as high as 29%.You are probably making a minimum payment every month that mainly goes towards interest with very minimal principal being paid off. At that rate, it could take over a decade to pay off your credit card. Make a huge financial step and pay off all or at least a good chunk of those credit cards. This will pay dividends all year since you will no longer have those high monthly bills to pay.
Put It In Short Term Savings
Hopefully, you have a short term savings account. If not, this is the time to start one. A short term savings account is one that you will open at a local bank. It is readily available to you for when an emergency comes up. Ideally, you should have at least 6 months of living expenses in your short term savings. This would be enough money to get you through a job layoff or sickness where you can not work. Without it, you could easily end up in need of emergency payday loans that can be costly. Savings may not be the most fun use of a tax return but it is the most responsible one. Plus, it will give you terrific peace of mind to know that you can ride out a financial problem.
Add To Your Long Term Savings
Give your Golden Years a bit more gold. Add some money to your long term savings by investing in an IRA. You can invest up to $6000 in an IRA if you are under 50 and $7000 if you are over 50. You will then be unable to touch the money until you are almost 60 but, it will continue to build with interest until that point. Start contributing to your retirement savings early and you can be sitting on a terrific nest egg when you get older. Most Americans fail to plan for retirement and unless you plan on working forever, you need to help buck this trend.
Invest In Stocks
Want to watch your money grow. Look into investing with a brokerage account. It is easier than ever these days and you can even get an account with no trading fees. Robinhood helps you do just that with their commission free trading app. Check it out but be careful. It is easy to get carried away with free trades. Unless you are familiar trader, your best bet may be to invest in a few of the more stable large blue chip stocks.
Make Home Repairs Or Upgrades
Have you been putting off a repair or upgrade? Now is the time to take care of it and also add value to your home. If that air conditioning is on its last leg, put in a new one and enjoy the comfort and energy savings all year long. Been wanting to upgrade the bathroom, get it done. Spending on home upgrades is a great way to use your return because the money is not wasted, it adds value to your home, increasing your equity.
Invest In Yourself
Sign up for a class at your local college or even online. Learn a new language or improve your work skills. Improving yourself and your education will do wonders for your self esteem. Also, perhaps you can use your new skills to improve your position at work. Get a raise or move into a position that you are more interested in.
Spend It On Needs
Instead of focusing on your wants, look at your needs. Do you need new tires on your car, new clothes for work or even some dental work? Now is the best time to do it. You should always cover your needs before your wants or you might fid yourself in a real jam at some point.
Start A Home Business
Have you always dreamed of being self employed? That tax refund represents a lot of start up capital. There are a lot of businesses that you can start for under $5000. Lawn care, janitorial services, carpet cleaning, pet sitting, craft sales, etc. Most of these can be done part time as well, allowing you to build your business while you have the stability of your full time job.
Make It A Down Payment
Your return could represent a sizable down payment on a lot of purchases. If you need a new car, a down payment can help you get a better interest rate. If you are dreaming of a new home, it could even be the closing costs on a zero down payment home loan. Home ownership would be the ultimate use for a tax return.
Splurge With Half Your Money
If you are having a hard time not having fun with your tax return, why not compromise. Instead of wasting it all, save half and then use the other half on whatever you like. Take a vacation or buy a luxury item that you have been eying. Maybe it is electronics or clothing, whatever makes you happy. Just be sure to save at least half and then have fun without guilt.