3 Wonderful Ways to Use Your Tax Refund
Now that the extended tax deadline is in our rear-view mirrors, you may be sitting on a neat windfall. According to the IRS, the average refund at the start of July was $2,762.
There's also the fact that the Tax Man is paying interest on refunds that were filed between the usual tax deadline of April 15 and the July 15 extension. While the interest earned on something like $2,762 would be negligible, it's still better than nothing. According to MarketWatch, it would put an extra $28.63 in your pocket.
Any day the government pays you money is a good day, but don't let all the excitement go to your head. While splurging on something like a new entertainment system might be fun, it isn't the wisest use of your refund in today's climate.
Here are three things you should think about doing first.
1. Pay off an Online Loan
Borrowing money is a normal fact of life. People take out cash loans all the time to help with large purchases and unexpected expenses.
But paying back the money you borrowed is another fact of life. If you get a cash loan online to help with an unexpected expense, you'll be given a repayment schedule that you must follow. Otherwise, you could face late fees and other penalties.
Paying off loans online with your tax credit could speed up the repayment process. Just double check that your cash loan lender won't penalize you for making early or additional payments. As long as there isn't any fine print saying otherwise, an early payment may reduce what you pay in interest.
2. Build out Your Savings
A stockpile of cash you put aside for when times get tough is crucial to your financial security. An emergency fund can help keep you afloat if you lose your job, or it can help you tackle unexpected emergency expenses you can't ignore.
When you don't have enough emergency savings, you can lose your financial footing.
- You may have to take whatever job you can get right away rather than having the time to search for something that checks off all your “must-haves”.
- You may need another cash loan online to cover unexpected emergency bills.
A basic emergency fund that helps out with unexpected expenses should cover three to six months' worth of living expenses. But you may need a year or more stashed away to withstand a job loss.
3. Invest in Your Future
Hoarding cash for a rainy day is important, but so is spending money wisely for your future. Take, for example, using your tax refund to afford an online class that could boost your earning potential.
Online classes offer a convenient way to level-up your credentials at a fraction of the cost of traditional education, and you can catch up on class on your own time. Choose the right one and you could qualify for a new job with a higher salary.
Do What Feels Right
After a long and potentially challenging spring, receiving a large tax refund will come as a relief. But before you spend it in celebration, make sure you consider how you use it before it's all gone. Following one or a combination of these strategic tips could help you strengthen your finances.