11 Ideas for Your Tax Refund This Year
Refund to Riches
If you're due a tax refund this season and you're average, you'll likely see more than $3,000. If it sounds substantial, it is. For many people it's an extra mortgage payment. Six months of car payments. More than half a full IRA contribution. I could go on.
So what should you do with yours? Selena Maranjian of The Motley Fool came up with a list of 11 smart to-dos recently published on Time.com. Have a look at them all, if you like. Or, just start with these favorites.
Eliminate high rate debt: Here at SavvyMoney this is what we're all about. The idea is to use your windfall to get rid of the highest-rate debt in your portfolio. Typically, that's credit card debt, though it could be a private student loan or a car on which you didn't carefully shop around for financing. Your interest rate is equal to the return on your money, so knocking off $3,000 of debt at 19% is akin to putting an extra $570 in your pocket this year. Pretty good. As the story notes, nearly 4 out of 10 taxpayers plan to use their refunds for this purpose, according to the National Retail Federation.
Build your reserves: Don't have an emergency cushion? You're not alone. Research has shown nearly half of Americans don't The folks at HelloWallet just released a white paper detailing a new and sensible way of figuring out how much you need in emergency expenses. Based on data on how much actual HelloWallet users are needing for emergencies, they suggest saving for three specific things: minor car, home and health emergencies; major car, home and health emergencies; and job loss emergencies. The recommendations differ based upon whether you're single, own a car or home, and have good or just so-so health insurance. Use their calculator to figure out what they recommend for you.
Invest in you: Have you been waiting to see a career counselor? To take classes that might put you in line for a promotion? Or even to give your health a boost by taking spinning classes or joining that new boot camp gym. Look for work-based incentives that pay you back for doing both of these things.
And finally, if you're still sitting on your hands waiting for that check to land in your bank account, the IRS can help you track it. Just go to Uncle Sam and ask, "Where's My Refund?"
Article was written by Jean Chatzky and provided by SavvyMoney®.