It’s that time of year. You’ve gathered all your documents, made your list and checked it twice for the tax man. Many will be receiving a refund which means a little extra money back in your pocket. What will you do with that extra cash? Consider the following ideas to help you further your financial goals.
Pay past due expenses. Use your tax refund to ensure any past due bills are paid and up to date. Late fees and other charges can add up and take a chunk out of your monthly budget.
Pay down debt. Go to www.extension.usu.edu/finance and click on the PowerPay icon. Enter the balances on your credit card (s), car (s), home, or any other debt you want to pay down. Click to calculate and watch as your detailed payment calendar shows you how much faster you can pay down your debts with power payments. Next, enter in the lump sum amount of your tax return that you are putting toward your debt payment. Click calculate again to see what a difference applying your tax refund to pay down your debt can make. Watch your debts decrease even more! The best part…this online program is completely free.
Set aside your refund money as an emergency fund. Unexpected expenses can be real budget busters! Having an emergency reserve in an easily accessible savings account can be a real life saver when we experience unexpected doctor visits or vehicle repairs.
Save for a major appliance or other large purchase. Dishwasher? Washer and Dryer? Refrigerator? Add a chunk of your tax return money to that major purchase. Putting $500 down on a $1,000 purchase can lower costs by as much as 75% because you are not financing the entire amount.
Save for your child’s education. Start now to save for your young child’s college education. Save $500 from your refund this year, and every year for 16 years, and end up with $8,000! And that’s with no interest! Shoot for an account with an average return of 5.5% over those 16 years and have over $13,000 for your child’s educational expenses after 16 years.
Start or boost your retirement funds. Invest $600 of your refund at age 30 with 6% interest and your money will grow to eight times the original investment by age 65. Continue to deposit the same amount each year and watch your investment grow to more than $72,000!
Save for a family vacation. Gather the family together and decide where you’d like to go together this year. Use a portion of your tax refund to jump start your savings. Reward yourselves for reaching milestones and it won’t be long until you’re making vacation memories together!
Make emergency supply kits for your family members. Experts recommended a $100 emergency cash stash in small bills and coins to add to each family member’s 72-96 hour kit. Use your tax return to add this amount. Don’t have 72-96 hour kits for your family? Are your current kits outdated? Use a portion of your tax return to buy supplies. Go to the Extension Disaster Education Network (EDEN) at http://eden.lsu.edu/Pages/default.aspx for the latest information.
By: Amanda Christensen, USU Extension Assistant Professor. Morgan County.