Receiving a nice, fat tax refund check can provoke quite a bit of temptation. You might consider rushing off on a dream vacation, or at least purchasing an upgraded home entertainment system. But if you view your tax refund as a chance to get ahead and change your circumstances, it can make a significant difference to your long term financial plan.
Pay off credit card debt. High interest debts are the worst ones to carry long-term, because the card company charges you interest upon interest! Plus, carrying too much debt can harm your credit score and make it difficult to get a mortgage or car loan with good terms. Pay off high interest debts when you get the chance, and you will build toward a brighter future.
Use it as a down payment on a new vehicle. With gas prices soaring, now might be the time to upgrade into a new vehicle with better gas mileage. Your tax refund could provide the perfect down payment.
Invest in necessary repairs on your home. Make repairs as the need presents itself, and you can prevent worse problems down the road. Or, install weatherproofing, new windows, and other measures that can save you money on future electric bills – a true investment in your own budget!
Build an emergency fund. Whether you already have one, or need to start one, an emergency fund can help you cover unexpected expenses. This means you avoid the need for a loan or racking up credit card debt, making a serious difference in your future debt load. Stash that refund check in a savings account.
Invest in yourself. If you’re not carrying high interest debt, in many cases the best thing to do is sock away extra cash in your retirement fund. Because interest compounds over the years, that contribution will be worth much more when you retire!
It can be hard to know the best way to invest a windfall when you receive one. Before making any big decisions, call us to schedule an appointment. We will discuss your options and help you decide upon the most beneficial way to use extra cash, to set yourself up for a more stable future.