Well some people would have already lodged their tax returns by now, I have. So what do people intend to do with their refund? Do you intend to use it to pay down debt, get ahead on bills, take a holiday or something else?
Image courtesy of basket man/freedigitalphotos.net
I personally like to use my refund to restock my budgeting bank accounts ready for the next twelve months and pay some extra on my mortgage. I’m fortunate that most years I get about $1500 in my refund so it is a good figure to do some serious budgeting with. This year I will be getting about $1700 and will be putting $700 straight into my budget bank account for bills and the other $1000 towards my mortgage. I like having a good buffer on my mortgage for weeks when something happens and I need to take a breather on my repayments.
My top tips for making the most of your tax refund
- Start your emergency fund: set up an account ready for your emergency fund.
- Pay down debt: a lump sum is a great opportunity for you to start your Dave Ramsey Debt Snowball. Imagine how good it would feel if you have a $1500 return and a $1700 credit card debt to get that started and only owe $200? How quickly could you pay that $200 off and then start snowballing into your next debt?
- Pay some bills: get ahead on some bills or pay your insurance for the next twelve months.
Whatever you decide to do with your tax refund make it work for you. After all this is money you worked hard to earn and it is a bonus that you are getting it back.