20 Feb Tax Refund? Don’t Blow It
Are you expecting a tax refund this year? Or maybe you’ve already received one. It’s easy to think of a refund as “free” money and it’s very tempting to blow it. Before you fall to that temptation, give some thought to these ideas that will pay off for you down the road:
We’ve all been told to keep an emergency fund. When you’re on a budget or living paycheck to paycheck, establishing an emergency fund seems impossible. With your tax refund, you have some money to get one started.
If you’ve wanted to start investing in mutual funds or the stock market, use your tax refund to begin. Your return may or may not be huge but it’s almost guaranteed to be a better investment than a new television or Xbox.
Save for the Holidays
The holiday season rolls around every year and many of us continue to be caught off guard and in response, we often rack up serious credit card debt. Starting a holiday account now and (hopefully) adding to it throughout the year will allow you to enjoy a debt-free holiday later.
Pay off (or Pay Down) Credit Card Debt
If you’re paying 18% or higher for credit card debt, one of the smartest things you can do with your tax refund is to eliminate or pay down these debts.
Make an Extra Mortgage Payment
If you have a mortgage, making just one extra payment or applying a sum of money toward your principal can provide significant savings over the course of your loan.
Save for College
If you have children, or even if you would like to go to college yourself, starting or adding to a college fund can be a great use of your tax refund.
Contribute to Your Retirement
Add to your IRA or other retirement fund and plan for your future instead of blowing your money today. (Consult your tax advisor.)
Escape the Payday Lending Cycle
Once you’ve been drawn into the predatory lending cycle of payday loans, astronomical fees and sky-high interest rates, it can seem nearly impossible to get out of it. Use your tax refund to get out of it for good. And, find a credit union to work with – preferably KEMBA!
Maybe you have a dream vacation in mind. Or, you’d just like to have enough cash put aside for a long weekend escape. Either way, putting your tax refund in a vacation fund can help make those dreams a reality.
Your refund amount probably won’t get you a dream kitchen or a totally new bathroom but there are still ways to use it to make some home improvements such as painting, home repairs that have been neglected, landscaping and whatever else would add some value and improve your living situation.
If you need to build your credit or improve your current credit situation, you might consider a secured loan. You deposit your tax refund (or any amount) and then receive a secured loan against that amount. By making regular and timely payments on this loan, your credit score and credit history should improve. Ask a KEMBA representative for more information.