Anxious to start blowing the bundle you’re getting back from the IRS? Before you delegate where you’re going to spend it all, consider these wise ways to re-purpose your refund in a way that will help you in the long run.
- Start an emergency fund
An emergency fund should be maintained once started and only dipped into for emergencies, not vacations or weekend expenses.
- Make a large payment on a credit card
Do you have more than one credit card? Consider paying off the one with the smaller balance. You can then increase the payment on the card with the larger balance in order to pay it off sooner.
- Pay back on a loan
Pay off a payday advance, car or boat loan.
- Make a payment to the principal on your mortgage
- Fix it
Everyone has that half-way or completely broken item that we continue to put off fixing, waiting for that one day we have the time and the money. Well, here’s the opportunity to fix that house hold item or the obnoxious noise your car is making. If not for yourself, do it for the people who have to sit next to you in traffic.
- Start a gym membership
Investing in your health will help save you money down the road on doctor’s bills and medications. Plus, looking and feeling better will go a long way in the how you interact with others on a daily basis.
- Invest in your career
Take a class or training seminar to refresh yourself on what you learned in school, but have since forgot, or get that pricey certification that can help you acquire a higher position at work.
- Give to charity
It feels great and, in the end, this will help you next tax season because you will have the opportunity to write it off.
- Start a college fund for your children
Ask your tax advisor about a tax favored college fund.
- Make an additional contribution to your retirement by opening an IRA
Ask your tax advisor if this is a logical option for you.
- Last, but not least, consult with your tax advisor to lower withholding for next year.
If your refund is extremely large; in essence, you are giving the government a tax free loan. Items to consider include a new child, swing in income (one spouse out of work), etc.
Don’t think of this as an all or nothing list or that you can’t spend any of it on something fun. The important thing is to take the time to be strategic with how you use your refund and to establish a balance.
The services of a legal or tax advisor should be sought before implementing any ideas contained in this blog. To reach a financial advisor at Lane Gorman Trubitt, PLLC, call 214.871.7500 or email at email@example.com.