If you belong to the majority of the United States population, approximately 80% to be precise, it’s likely that you’ll receive a tax refund this year. How exciting!
My spouse and I found ourselves forking out over $8,000 in taxes last year, and believe me when I say it was painful writing that check to the IRS!
To remedy this situation in the current tax year, we made amendments to our deductions. Moreover, we invested in a property and welcomed a new addition to our family, which significantly contributed to a fair tax refund.
Even though a refund essentially suggests that you’ve provided the government with a no-interest loan, the sweet sensation of receiving a lump sum greatly outweighs paying taxes. Most people, in fact, treat their tax refund as a sort of involuntary savings account.
Lots of ideas floated around when it came to spending our tax refund, but there are several noteworthy strategies suitable for everyone. Take a peek at what we considered, and the final choice we made.
1. SQUARE AWAY DEBTS
Considering the average US household struggles with approximately $15,000 in credit card debt, it’s logical that most would opt to use their refund to settle these debts. Allow your refund to provide a sense of relief and inspire more aggressive efforts against your debts.
2. FINANCIAL BOOST FOR A MAJOR PURCHASE
Following a home’s mortgage, a car is typically the next big-ticket item on Americans’ shopping list. Not to mention, cars are usually replaced more frequently than houses.
Raising funds for a car down payment isn’t always smooth sailing, especially without a car to trade in or while you’re still paying off the old one.
Use your tax refund for the down payment and you could significantly shrink the duration of the loan by lowering your overall repayment amount. Unsure about how to utilize your refund? Here are 5 savvy options!
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3. SAVE IT
Many pledge to save their tax refund, however, everyday costs and unexpected emergencies often reduce the amount initially planned to be socked away.
Allocate a certain percentage of your refund to savings immediately to ensure those good intentions come to fruition.
4. TREAT YOURSELF
If you constantly find yourself living paycheck to paycheck, a tax refund might seem like the perfect opportunity to enjoy a well-deserved treat after a year of hard work. A dream family vacation or some retail therapy can be exquisitely satisfying.
5. A MIX OF EVERYTHING!
In the end, we decided to do a little bit of everything! A portion was directed towards a savings goal for my husband’s new car (the old one served us for 15 years!), another was funneled into a much-deserved vacation to Cabo San Lucas, some into topping up our savings, and the grand finale was the total clearance of a credit card debt.
