Everybody loves getting a tax refund. But before you go out and spend the whole thing, stop to consider some other, wiser things you could do with it. The suggestions below from PennySaver USA may not be as exciting as getting the latest tech gadget or some brand new clothes, but they will pay dividends for years to come.
Pay Down Debt
Large balances and high interest rates cost you big bucks and may end up damaging your credit. Use your refund to pay down your debt, especially if you are having problems making payments on time. You could save hundreds to thousands in interest and improve your ability to get good loan rates in the future.
Deposit your refund in a an income-bearing account, such as a money market account or a certificate of deposit, or buy savings bonds with it. A couple of years of saving your income tax refunds this way will create a solid nest egg. If you’ve nothing saved for retirement, this is the perfect opportunity to open an IRA.
Invest in Home Improvements
A mortgage is the biggest investment many people will make. Use your income tax refund to make improvements that will protect or increase the value of your home. It’s a better alternative than borrowing to make improvements or letting the value of your property slip. Energy-efficient upgrades improve your home’s value and save you money over time by reducing heating and cooling costs. Search the home improvement classified ad listings on PennySaverUSA.com.
Use It for Education
Consider using your refund to finance tuition for a certification or professional conference that will improve your employment skills and career opportunities, which in turn increases your earning potential. Or if you have a child or grandchild, consider depositing it in an education fund. Some states offer taxpayer credit for contributing to a 529 plan that helps someone go to college.
Start a Business
If you’ve always dreamed of opening your own business, now may be the time. Apply your refund to startup costs. If you need additional funds, apply for a loan through the Small Business Administration. Or, if you receive regular income from a structured settlement, sell your future payments for a lump sum of cash now.
If there is some type of insurance you want or need but haven’t been able to afford, use your income tax refund to get it. Life insurance, flood insurance and renter’s insurance protect your family and property and provide peace of mind. If you spend it on expensive shoes or a down payment on a new car, you’ll get some enjoyment, but insurance will protect you and your assets.
Book Your Vacation
Use your refund to book your summer vacation. Buy airline tickets and make hotel reservations now, and then bank the rest for spending money. If you already have a vacation fund, add your refund to it, so you can spend time on a tropical beach without going into debt. Start your search now and browse through vacation rentals on PennySaverUSA.com!