I Received My Tax Refund, Now What?

So you have received your tax refund? Are you trying to decide what to do with the money. Should you invest or go on a shopping spree? That is usually the struggle that many people deal with every year.

Let us help you decide what to do with your tax return.

Pay off Debts:

Ø  Credit cards

Ø  Pre-pay mortgage

Ø  Pay off student loans

Ø  Car loan

Remember to do this in baby steps. Pay off the smallest debt first, then stack that payment onto another debt and so forth. This will help you pay off debt more quickly. You’re already paying out each month, so why not get out of debt?

Savings and Investing:

Ø  IRA (Individual Retirement Account)

·       Use your refund to increase your retirement plan contribution

·       If you don’t have a retirement plan at work or if you’re contributing  the minimum, you can use your tax refund to contribute to a Roth IRA.

Ø  529 Plan or Qualified Tuition Programs (QTPs) 

·       This is an education savings plan operated by the state or educational intuition designed to help families save money for their children’s college tuition.

Emergency fund:

Ø    This fund is in case of an actual emergency, such as the loss of a job, an illness or major expense. A good rule of thumb is to have at least enough money saved in this account to cover at least 3-6 months of living expenses.

Ø    A CD fund or money market account are great options.

Save:

Ø    Of course you can save your refund to go toward purchasing a new vehicle. If possible save up enough money to buy a new vehicle with cash that way you don’t have to worry about payments.

Ø   How about saving for a family vacation. We all need to have fun and get away every once in a while!

Donate to charity:

Ø    If you have things caught up, you can always help those in need. Now more than ever, charities are in desperate need of donations.

As you can see there are many ways in which you can use your tax return. We wanted to give you some ideas of the best ways to invest, save and get out of debt. If you would like to find out more ways to use your tax return or simply would like a consultation regarding taxes, bookkeeping or accounting, contact us and we will gladly help you.