It’s the end of tax season and that may mean a big fat refund check is coming your way! According to the IRS, the average tax refund is $3,120. So why not maximize your tax refund this year by using it smartly? Below I came up with some smart ways to use your tax refund this year.
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#1 Pay Down Existing Debt
We are using our tax refund to pay down our credit card this year. It’s such a good feeling seeing those balances go down. We are so close to being debt free and this tax refund will only help us get closer to that goal!
#2 Start Your Emergency Fund
Starting your emergency fund with $1,000 saved is a good idea before paying down any debt. We are following Dave Ramsey’s snowball system to get out of debt and build wealth. Starting an emergency fund is the first baby step in Dave Ramsey’s plan for The Total Money Makeover. Having a bit of cash saved will prevent you from using credit cards to make emergency purchases. It’s the only way to break the vicious cycle!
#3 Put it Towards Your Mortgage
Repeat after me: It is possible to pay off my house early! Of course, one tax refund won’t accomplish that but making extra payments sure will (as long as there are no penalties for doing so). Dave Ramsey has an amazing article on his site that I urge you to read! Click here to read 3 Easy Ways to Pay Off Your Mortgage Early.
#4 Use it For Next Month’s Rent
Earlier this year, I read a news article about a single mom who used her tax refund to pay off her rent for the whole year. HEr story is so inspiring and what she has to say really makes sense. A roof over our heads is more important than getting the newest Jordans. Even though I’d never buy those shoes for myself.
#5 Spend it on a Hobby
I have a few hobbies I’d like to put some more money into. Investing further in your passions is so beneficial for your mind and soul. Not only do you get to explore your creative abilities in photography, skiing, or whatever else you might like, but you also get to enjoy yourself too! There’s no better feeling in the world than doing something you love.
#6 Invest Your Money
Investing is hardly something we think about when we’re young. Hell it’s something we haven’t even gotten close to doing yet either. Whether you buy property or shares, investing your money is an excellent way to build long-term wealth. I’m not at this point yet so I provided you with some articles that I found helpful below.
#7 Save For Your Education
Have you ever wanted to learn a new skill or go back to college? Now might be the perfect time to take classes at your local community college or even take a few courses online on sites like Udemy. I also recommend Coursera, where each course is taught by top instructors of the world’s best universities. I’ve tried both and I really like them! It’s hard to admit but I learn more in those courses than I do in my college classes! Not to mention they are very affordable and many of the courses on Udemy are free.
#8 Replace Household Appliances
Replace household appliances that are looking worse for the wear. No need to keep using a crappy blender if it’s not doing its job correctly. Now that you have the cash in hand replace anything that’s not working properly and put the credit card back in the drawer.
#9 Save it For Christmas Presents
I think I should follow my own advice for this one. Every Christmas I’m not prepared to purchase gifts because I don’t have any extra cash saved up. Putting away part of our tax refund in a safe spot might take the pressure off us once December rolls around.
That’s it, guys! What do you think of this list? Would you add anything different?
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