5 Things to Do With Your Tax Refund
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It’s that time of the year again! Tax season has arrived and that leaves many of us with some extra cash in our pockets and smiles on our faces. Now we are left with the big question, “What should I do with my tax refund?”
Here are 5 ideas on to use is wisely.
- Save it: I know it sounds boring, but go ahead and push the transfer tab in your online banking app right to your savings account. This will be a nice little rainy day or emergency fund. Having a cushion in your savings account is important for many reasons; life happens, things break, and things happen that are out of your control. Your car breaks go out, a sickness in your family, major repairs in your home, and the list can go on and on. You will be thankful you have a nice nest egg to dip into instead of putting a strain on your bank account or charging it on a credit card.
- Pay off debt: Speaking of credit cards, let’s make a dent in that credit card debt you have racked up. We pretty much all have some type of debt, whether it’s credit cards, student loans, car loans, etc. I recommend using the Dave Ramsey debt snowball method to decrease your debt. In case you are not familiar with the Dave Ramsey snowball method here is a quick breakdown: Step 1: List your debts from smallest to largest. Step 2: Make minimum payments on all your debts except the smallest. Step 3: Pay as much as possible on your smallest debt. Step 4: Repeat until each debt is paid in full. My husband and I have personally used this method for years and it works, trust me!
- Invest It: There a lot of investment opportunities out there. The most common would be in the stock market. If your company is publicly traded
,that is a great place to start. Personally, my company Camden Property Trust is a great stock investment. I am not an expert at stock investment, but if you are interested in learning more Forbes has some great information for beginners. You can also invest it into your own retirement plan, 401K, or a college fund for your children. A few unconventional investments are a peer-to peer lending, lending club, or into a Kickstarter company.
- Pre-pay your bills: Getting that extra money from your tax refund is the perfect time to prepay your monthly bills. This will give you a break for the next couple months and ensure that you don’t spend your money on something foolish. You can pre-pay your rent at your apartment, car payment, utility bills, etc. What a huge stress relief knowing that all of your bills are already taken care of, right?
- Buy something you need/want: Is there something you really need but have been putting off because you don't have the money? Well, now is the time to treat yourself to that special something! You deserve it. Buy that new couch for your apartment, or those new tires for your car. Plan a much needed vacation or family trip. This one is obviously my favorite, but probably the least responsible.
If you’re lucky enough to get a really big tax refund, you can even try a few different ways to spend your refund. I hope these ideas were helpful in using your tax refund wisely!
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