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With the tax deadline coming up, I’m sure you have all seen at least a few “tax refund sale” commercials and ads. These make me sick. There are so many great things that can be done with a tax refund and all these companies want you to do is spend them on stuff you don’t really need.
Here is a list of 5 productive things you can do with that money:
1. Put it in your savings account. While this sounds really boring, having a decent emergency fund is far from a bad idea. Next time your car breaks down or the water heater goes, you’ll be so happy you had that extra money laying around. You never know when life will throw you the next curveball, and you need to stop relying on credit cards to make up the slack. Stop being addicted to OPM – other people’s money.
2. Fund next year’s Roth IRA contributions. Waiting until the end of April 2015 to fund 2014’s Roth contributions means one thing – you’ve missed all of the compounding interest you could have made during the year prior. It’s always a good idea to get your contributions in early so they have all year to earn you more money. If you’re not into the Roth IRA thing, Betterment is a great option as well.
3. Make extra payments on your debts – getting out of debt is the number one thing that will ultimately “set you free.” Not having to pay creditors means you can do what you want with that money each month. I feel like there is nothing similar to the feeling of being out of debt, and I cannot wait to get there. This is what I did with my tax refund.
4. Make repairs that will ultimately save you money in the future – Have a chipped windshield? Get it filled before it cracks and you have to replace it. Have a leaky faucet? Get it fixed and save on your water bills. Make smart decisions and they will pay off later.
5. Get ahead of your bills – if you really can’t come to terms with putting this money right into the bank, try paying off your bills early so you can use the next paycheck to pay down debts. A lot of money management is about psychology and how it makes you feel, so if this is what will make you feel productive, then go for it.
There are so many great ways to spend/save your tax refund. Whatever path you choose, just be smart with your money. Take your time, there is no need to spend this all in one place.
For those of you who have already received your refund, what did you do with the extra money?