5 Smart Ways to Use Your Tax Refund
April 15 is less than a month away and if you’re expecting a sizeable tax refund, it’s tempting to use that money on something fun instead of being responsible. Here are 5 smart ways to use your tax refund that won’t make you kick yourself later.
Pay Down Some Debt
If you have outstanding balances on your credit cards or student loans, now is a good time to pay some or all of those off. My favorite way to pay down debt is the snowball method, where you start with smaller debts first and then work your way up to bigger ones.
I am a big proponent of having an emergency fund (I think it’s more important than any other type of savings account) and this is a great use for your tax refund. If you haven’t started one, now is the best time to do it.
Prepay Your Bills
Many insurance providers will give you a hefty discount if you pay your 6 or 12 month premiums in advance.
Set up a checking account with automatic payments for large bills such as your mortgage, rent or car payment. I have done this the past two years with my car payment and it’s great because it frees up a large chunk of my monthly budget for other things.
Use your tax refund to make improvements in your home, such as installing energy efficient windows, upgrading your washer and dryer or a new coat of paint.
Treat Yo’ Self
Following the sage advice of Parks and Recreation characters, Tom and Donna, use your tax refund to treat yourself. Indulge in a spa day, buy a new laptop or take a mini-vacation. Sometimes splurging is the smartest thing you can do.
Not a bad idea, but paying off the mortgage quicker won’t save money for everyone. Really depends on the interest rate. Ours is now under 4% (1 year arm), so my money is better invested elsewhere than paying down the mortgage. But excellent in times of higher interest rates as it’ll save a lot of money in the long run.