According to the IRS, the average tax refund received in 2014 was almost $3,000. Thinking of buying a new Super-HDTV or taking a weeklong vacation with your refund this year? Consider what else you could do with your money.
Treat yourself. Don’t overdo it, but putting 10 percent toward something just for you should make for a nice treat. It may also help curb the desire to make a larger impulse purchase.
Establish an I-got-your-back fund. Try to have at least three to six months of living expenses on hand for unexpected situations, like a job layoff or health problem. Put this money in a Money Market Account, which typically carries a higher dividend than a savings account. Resist the temptation to spend by skipping the ATM card.
Invest in your home. Increase your home’s value with a new roof or bathroom upgrade. Could new energy-efficient appliances help reduce your monthly utility bills? A small investment now, could pay off big later.
Make an extra payment on your mortgage. Paying off your mortgage may not be as attractive as that new Super-HDTV, but the unattractive options are sometimes the ones that make the most sense. Think about the interest you’d pay over the life of the mortgage. In some cases, it may be nearly as much as the principal. By adding an extra payment, you could reduce the interest that you would likely pay.
Pay off credit cards. Since this is possibly the debt with the highest interest rate, start here. If you can knock down — or knock out — this debt, think of all the money you’ll save in interest alone.
Fund your retirement. Did you know that if you make a one-time deposit of $2,000 and invest it in an IRA comprised of stocks that earn 11 percent (the historical stock market average), it could grow to $53,416 in 30 years? Put in $2,000 every year for 30 years and you may be looking at $495,736!
Try one or more of these tips to make your refund go further this year.
The advice provided is for information purposes only. Consult your financial advisor or tax consultant for additional guidance.