Advertising
Advertising

10 Smart Things You Can Do With Your Tax Refund

10 Smart Things You Can Do With Your Tax Refund

It’s that time of the year again and you’ve been pretty diligent with your taxes, so you find yourself with an extra $2000 on your hands and you start wondering what to spend it all on. People often get confused when they get a relatively large sum of money and end up spending a good chunk of it without really knowing where the money went.  Well, spending your tax refund might be pretty easy, but it if you want to use this money wisely I suggest you take a look at some of options listed below.

Figure standing on money

    1. Pay off school loans

    Student loans can affect your life plans and even your partner’s plans for that matter. These loans can never be discharged, even in bankruptcy, and if you delay paying, your tax refunds can be seized, wages garnished and credit ruined.  Of all the debt you may have to pay, student loans should take top priority.  For young married couples, the problem can be doubled if both have student loans. Even if you are currently single you’ll want to pay off your student loans as quickly as possible, so you can move on with your life and worry about more important things.

    Advertising

    2. Enhance your child’s college fund

    It’s never too early to start thinking about the future and when it comes to giving your child the best education you can afford, it’s good to start planning well in advance. A thousand dollars can be a nice starting point and help you get the ball rolling, so to speak. Check out your state’s 529 plans.

    3. Put it in your savings account

    Putting money into a savings account allows you to have peace of mind. When faced with potential problems and emergencies you will feel a lot less stressed out if you know that there are a couple of thousand dollars sitting on your account. Major home or car repairs, injuries, or an infestation in your home can come at the worst of times ,and having that little extra money saved for rainy days will reduce your stress immensely.

    4. Focus on big ticket buys

    Instead of frittering your tax refund away on a bunch of insignificant things that will be gone or unwanted in a short time, you can focus on investing in some big items that will last,  like a new fridge, a big screen TV, a new car or even a gaming console for your kid (or yourself). These purchases are good investments since you use them every day and they will last a long time.

    Advertising

    5. Take a bite out of your credit card debt

    When it comes to debt, an extra $1000-$2000 can really help you move forward and start that debt-destroying tactic you’ve been trying to implement for a while. You’ve probably already discovered that paying just the minimum every month doesn’t reduce your debt by much, if any. Paying off a smaller debt first and then moving on to the next one until everything is paid off is a sound tactic, but with this sudden boost to your funds, you can focus on high-interest debt first and take a huge chunk out of it, saving yourself hundreds or even thousands of dollars of interest in the long term.

    6. Get a better cell phone

    Technology is getting better by the day, it seems,  and staying stuck with an old phone and a mediocre plan is far from ideal. If you use your phone a lot, and most people do, a tax refund can be a great opportunity for you to upgrade to a brand new cell phone and get a cell phone plan that fits your needs. If this means that you can get rid of a land-line phone, or keeps you from needing a laptop, it can save you money in the long run.

    7. Do some house maintenanc

    There are always a lot of things that need fixing around the house, things that we usually put off because we don’t have the time and money to deal with them. A tax refund is the perfect incentive to get some of the work done. You can repaint the house, fix the plumbing, buy some new furniture, get a couple of new lamps for the living room, get a new carpet, remodel your bathroom, improve security with a sturdy front door and new windows, invest in some landscaping, buy more energy-efficient appliances, etc. Your house is probably your largest investment, and taking care of it pays off.

    Advertising

    8. Invest in acquiring new skills

    Having a range of useful skills doesn’t just look good on your resume – it can help improve the quality of your life or even help you earn a bit of money on the side. If you’ve always wanted to play an instrument or sing you can join a class or go to a vocal coach. Maybe you want to invest in a defensive driving course that will greatly improve your driving skills and lower your car insurance costs.  You could take a cooking course or buy a decent camera and start learning about photography. These skills can increase your enjoyment of life, and might also increase your income.

    9. Invest in your health

    Let’s face it, most of us need to take a good hard look at ourselves and make a few changes when it comes to our health. With some extra money on your hands you can afford to,join a gym, consult with a nutritionist,  and hire a personal trainer.  Maybe you’d like to combine acquiring new skills and healthy exercise by joining a dance or martial arts class. Investing in your health also means fixing your teeth, getting a checkup at the doctor’s office and stocking up on some supplements like D3 and fish oil.

    10. Allow yourself some luxury

    Sometimes you just have to give in to urges and pamper yourself a little, especially when you have a good opportunity to do so. You can use your tax refund to go on a little romantic trip with your partner, wine and dine at some higher-class restaurants for a while, take the kids to Disneyland or anything else that allows you to live life to the fullest and recharge your batteries. This way you are investing in your mental health and strengthening the bond between you and your loved ones. The important thing is to use only a portion of your tax refund on indulgence and dedicate the rest to things that will improve your life long-term.  Finding this balance is the key to enjoying your windfall.

    Advertising

    People are often tempted to go wild and start spending their tax refund willy-nilly, losing hundreds of dollars on insignificant items bought on impulse. Try to fight this temptation and look into some of the smart options listed above that will help you put that extra money to good use.

    More by this author

    Ivan Dimitrijevic

    Ivan is the CEO and founder of a digital marketing company. He has years of experiences in team management, entrepreneurship and productivity.

    50 New Year’s Resolution Ideas And How To Achieve Each Of Them 8 Fun and Unique Birthday Party Ideas for People in Their 20s 50 Cleaning Hacks for Your Home That Will Make Your Life Easier 40 Amazing Date Ideas for Valentine’s Day 9 Unexpected Benefits Of Foot Massage That Make You Want To Have One Now

    Trending in Money

    1 How to Nix Your Credit Card Debt in Less Than 3 Years 2 Top 5 Spending Tracker Apps to Manage Your Budget Smart in 2019 3 How to Use Credit Cards While Staying Out of Debt 4 How to Use Debt Snowball to Get out from a Financial Avalanche 5 How Personal Finance Software Helps You Get More Out of Your Money

    Read Next

    Advertising
    Advertising
    Advertising

    Last Updated on April 3, 2019

    How to Nix Your Credit Card Debt in Less Than 3 Years

    How to Nix Your Credit Card Debt in Less Than 3 Years

    Debt is never a fun thing to be in. But, there are many actions that you can take that will help you rid yourself of the burden of debt once and for all.

    By coming up with a set plan, eliminating your debt can feel much easier than constantly thinking about it.

    This post will provide some tips on how you can do this to help you nix your credit card debt in less than 3 years.

    Hint: there are ways that are easier than you think.

    1. Consider Consolidating Multiple Credit Cards If Possible

    This may not be applicable to you, but if you have multiple cards – it is something to consider. Keeping up with multiple bills is time consuming.

    It will depend on the balance you have on each. Consolidate ones you can but do not do it to the point that you get too close to the maximum limit. Also, it is ideal to pick the card with the lower interest rate.

    Consider if there are any fees or alternatively, rewards, with transferring a balance to another card. Watch out for fees. Note that some cards offer rewards for transferring a balance to them. This is extra cash that can help go towards paying off your debt.

    Advertising

    Having one or two cards can make nixing your debt much simpler than keeping up with the balance of a bunch of cards. Keeping track of paying the minimum towards a bunch of cards is time consuming. Spend the time to consolidate instead to make the overall process simpler going forward.

    My tip: Have one main credit card. Have a second one that you use for necessities – such as groceries or gas – that offers rewards for those purchases (a lot of cards do) and set the second one on auto-pay. You should be able to pay off a smaller amount on auto-pay if it is a necessity. If you think you cannot, then you may need to cut down a lot on expenses.

    Why do I suggest doing this? Having one thing set to auto-pay is one less thing to think about. One less thing to waste time on. Same idea with consolidating to one main card. Tracking down too many is a hassle.

    2. Try to Pay the Full Balance You Spent Each Month at the Very Least

    You need to pay off the amount you are spending each month when that bill comes in. This is the amount you spent THAT month.

    Do not let the debt keep accruing while you work on paying any unpaid debt that has accrued. It will become a never-ending battle. Try as best as you can to be current on paying for each month’s expenses when that month’s bill comes out.

    If this is a strain, consider why. You may need to cut expenses. Or you may need to consider other cards. Or look at where this money is going.

    3. Pay Extra When You Can – Every Small Amount Counts

    This cannot be emphasized enough. If you are looking at a lot of credit card debt, it can look daunting, but each extra amount that you can put towards the debt will really add up – no matter how small it is.

    Advertising

    It does not just reduce the principal amount that you have left to pay off, but it reduces the amount that is collecting interest. You will always save money with that reduced interest.

    4. Create a Plan on How to Pay Extra

    Back to the main point, having this plan is giving you one less thing to think about.

    This plan should be a plan that works for you. If it does not work for you, your spending habits, and your views on debt, then it will not be an effective plan.

    For instance, if a set plan of an extra $50 (or another amount that you know you can afford) works for you, then do that. Set that aside every month and pay that extra amount. Treat it like a bill. Choose an amount that works for you and pay it like clockwork as though it was a bill you had to pay each month.

    Little amounts will not nix it entirely, but they will help tackle it and having a set plan can make it less of a chore. Creating a new plan of how much to put towards it each month is an unnecessary added stress.

    5. Cut out Costs for Services You Do Not Use

    If you are signed up for subscriptions that you do not use because of some free trial or for some other reason, cut it out. Your overall financial position will look better.

    In turn, that will make cutting your credit card debt easier. Look at your statements to find these expenses. If you do not use them, you may forget you are paying some unnecessary amount each month. Cutting it out can really add up in savings that you can put towards other needed expenses.

    Advertising

    6. Get Aggressive About It

    Consider these points:

    Depending on the interest and the level of debt, you may need to give up a few indulgences. For example, instead of ordering delivery or going out to eat, cook at home. Everything adds up.

    Other things may be more of a sacrifice. It may be a trip you wanted to go on, or a daily latte habit you’ve picked up. In these instances, consider how important it is to you and if it’s worth the sacrifice. And if it is a costly expense, think whether you can wait to indulge.

    Cutting an extravagant expense can really help make a dent in your overall debt. Try not to add to debt when you are trying to pay it off. It will be a never-ending battle. Make it less of a battle with these tips and it will feel easier.

    Bottom line: Do what you can to make this process easier for you. Implement steps that do this. It takes time now, but will help overall. Also, keep track of your spending and paying down of your debts. Which is the next point.

    7. Reevaluate Your Progress at Set Intervals

    Doing a regular check-in can help you see your efforts pay off or maybe indicate that you need to give this a bit more effort. If you check every 3-6 months, it will not feel so much like a chore or feel so daunting.

    By doing this, you will be able to better understand your progress and perhaps readjust your plan. Bonus: if you see it pay off, it will feel great to do this check-in. You will get there.

    Advertising

    Finally (and most importantly)…

    8. Keep Trying

    Do not get discouraged. Pushing it off will make it worse. Just keep trying.

    Once your debt becomes lower, each monthly payment will reduce the balance more. Why? You are paying less towards interest. It will be a snowball effect eventually and it will become much easier to manage. Just get to that point. And know once you do, it will feel easier and motivating.

    Start Knocking out Your Debt Today

    The best way to eliminate debt is to get started right away. Begin by implementing the above steps and watch your debt just melt away. Try out some of the above strategies and see what works best for you. Soon you’ll be on your way to a debt free life.

    More Resources About Better Money Management

    Featured photo credit: Pexels via pexels.com

    Read Next