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Tax Refund
1. Eliminate your credit card debt.
Credit card debt doesn’t go away by itself, and if you’re waiting on a pile of
cash to fall into your lap, your tax refund can be the answer to your prayers.
Even if you don’t receive enough to eliminate your balances completely, your
refund can knock your balances down and jump start your pay off efforts. Plus,
the less you owe on your credit cards, the higher your FICO score.
If there isn’t enough cash to go around, pay down your credit
cards with the highest interest rates first. For credit health, keep balances
less than 30% of your credit limit.
2. Replenish your savings account.
Maybe
a financial emergency during the year took a chunk of your personal savings.
Then again, you may not have a savings account. Of all the smart things to do
with your tax refund, saving should be at the top of your list. Some people don’t
think about saving until they’re caught in the middle of a financial crisis.
Everyone earns differently, and whereas one person can comfortable stash 10% of
his pay each month, another person may not have the extra income. Save your tax
refund and you’ll build an overnight cushion.
3. Start planning for a house.
With
mortgage lenders requiring at least a 5% down payment, you might cancel your
plans of buying a house. But don’t let this financial requirement stand in your
way. Your tax refund can put you a step closer to ownership. How so?
Let’s say you purchase a $150,000 house. In this case, you’ll
need approximately $7,500 for a down payment. With an average tax refund of
$2,500, you can realistically achieve your goal and purchase a home in
three years – providing you save your money.
4. Boost your home’s value.
Home
maintenance is a beast. If your house needs work, nothing gets the job done
faster than free money from the federal government. Use your tax refund to
remodel your kitchen, bathrooms, replace the floors or install energy-efficient
windows. These upgrades not only improve the appearance and condition of your
home, but raise your property value. And with energy-efficient upgrades, you
might qualify for additional tax credits on next year’s tax return.
5. Plan you kid’s’ future.
College
and cheap are never used in the same sentence. And if it weren’t for student
loans, grants and other financial aid, many people wouldn’t attend a college or
university. Make good use of your tax refund and start a college fund for your
kids. Saving your refund over five or ten years can provide a sizable fund for
school and reduce the need for student loans. Deposit this cash in a high-yield
savings account and you’ll maximize your savings. These accounts have higher
interest rates than your traditional savings account, letting you grow your
money faster.
6. Think retirement.
You
can never have too much in your retirement account, and if you haven’t planned
for retirement, now’s the time to start. There are a couple of ways to approach
this. Open an individual retirement account (IRA), or increase contributions to
your employee-sponsored 401K. The maximum you can contribute to a traditional
IRA for 2013 is $5,500 ($6,500 if you’re 50 and older).If you decide to
increase contributions to your 401k, your tax refund can compensate for the
difference in income.
7. Invest in your future.
If
you’re over your job and ready for a change, using your tax refund to start a
business can be the change you need. This money can cover the cost of supplies
and advertisements. This is your opportunity to be your own boss and pursue
your goals. Then again, perhaps you’re satisfied with being an employee, but
you’re looking for ways to increase your salary. Your tax refund can be the
edge you need. Take the money and sign up for college classes, seminars or
workshops. As you take refresher courses and improve your skills, you’ll be
more employable from a company’s standpoint. This can put you ahead of the
competition when applying for jobs, and help you find employment faster as a
job loss.
Have A Great Cheap Cheetah Day!
