Spending a Tax Refund Wisely

Posted on February 5th, 2014 by Discount Debbie

So we have gone through the torture of filing our taxes, waited for the money to come in, and now we are rewarded with a nice refund check. Stop and think before spending that money on a huge shopping spree or trip to see Loch Ness. There are other ways that money can make our lives better in an every day sense.

Get Out Of Debt

Nothing gives financial stress relief more than getting out of debt. Pay off credit cards. Bring bills up to date. Pay off student loans or car loans any other kind of loan hanging over our head. Getting out of debt also lowers our monthly cost of living. We no longer have credit card or car payments. If we need to we can lower the coverage of our car insurance to liability (though only if we’re desperate to save some money… which yeah, we are). ¬†We save the extra money for retirement, a family vacation, or a rainy day.

Buying a Step Up

We plan to get a better car this year. Not a new car, but a car better than the current vehicle we have. It will be safer and also have better gas mileage. In short it will fit the needs of our family better. We are hoping our next step up will be buying a house. We plan to save what we can over the year and supplement our savings with our tax refund in the hopes that it will be enough for a down payment.

A word to the wise: Always have a plan B when preparing for a needed step up. Tax laws change every year. It is best to use a refund as a bonus, instead of hinging the whole plan financially on the refund.

Preparing For The Future

Are you a little behind preparing for retirement? Use your refund to pad your savings. Is a baby on the way? Use your refund to buy furniture, diapers, and formula. Are you looking for a better job? Use the refund to get the education and training needed for your new line of work.

Preparing for the future is one of the best things we can do with our tax refunds. It keeps us looking to the future instead of looking back and wondering what if.

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