5 Smart Ways to Spend Your Tax Refund
So you got a big refund this year. Remember that if you choose to have less deducted during the year, you can get more money in your paycheck and have less during tax time. If you’re clueless as to how to put your newfound windfall to good use, there are some simple ways to make your money work for you.
1) Pay off your debts. Paying off your debts not only gets those annoying creditors off your back, but also can improve your credit rating making bigger purchases like cars and houses more attainable. Choosing the right type of debt to pay off is crucial. For example, mortgage interest is tax deductible and relatively inexpensive, however credit cards are high interest and can have hefty penalties for paying late. Therefore, pay your credit cards down and any other high interest or high penalty debts first and leave your rather moderate or low cost debt for your monthly budget.
2) Go to college. Many people put off going to college or going back to college because they feel the costs are just out of their reach. Almost every accredited school in the nation offers payment plans, financial assistance, scholarships, grants and loans. Now may be the time to invest in yourself and get the degree that you wanted or go back to school and further your education. Doing this can mean more money from your current job or better opportunities elsewhere.
3) Send Your Kid to College. If you thought it was a big deal for you to have an education, chances are it will be even more important for your children. If you have kids who are still in school, now may be the time to start a college savings account for them. In North Carolina, there’s the CFNC, which allows up to $13,000 to be contributed each year to a single child without incurring any taxes.
4) Start an Emergency Fund. Sometimes, bad things like long illnesses and car accidents can set us back further than we like. The last thing we need is to lose our job or home because of unforeseen circumstances that could have been avoided if we had simply had the money to take care of emergencies on the spot. With an emergency fund, you can feel more confident that you have that ability. You may think about an easily liquefiable high-interest bearing savings account.
5) Start a Retirement Fund. Many of us put off retirement until it’s way too late. This might be a chance to start yours. Contact a financial advisor about starting an IRA or other funds to get you started.
There are many ways to make your money work for you. Most of all, make sure you don’t spend your money on things that aren’t working for you.