Tax season is in full swing and maybe you have already gotten a refund or are expecting one any day now. The average tax is almost $3,000 which a pretty hefty chunk of change that can used be many different ways to help make your life easier. So how should you spend that refund?
Paying Down Debts
One of the smartest things a person can do with their tax refund is to use in paying down debts. We recommend paying down unsecured debts first such as credit cards and personal loans. These debts generally come with the highest interest rates and by being paid down can help increase your credit score in the fastest way possible by quickly improving your Credit Utilization Ratio which accounts for 30% of your credit score. Also, due to the high interest rates associated with unsecured debt by paying off a large portion you can see your monthly drop dramatically saving you money each and every single month.
Invest In Your Home
One thing you can do with your tax refund is invest in your home. Maybe you have always wanted to add a deck to your backyard or update your cabinets or get new appliances. With your tax refund you do these things which can give you enjoyment while you are living there and can help increase your home’s value in the process. Later on whenever you decide to move you will thank yourself when you home brings you more at sale.
If you are one of the lucky ones who are debt free and don’t have any need to improve your home maybe you can use the refund to do some things that you don’t normally get to budget for. This could be going to nice restaurants, concerts, or taking that trip you have always wanted. A good life is one well lived.
Lastly, one of the top things you can do with your refund is to save it. You never know what life will throw at you, be it: car wrecks, loss of job, health problems, home repairs, etc. Having a good savings will be able to help you in times of need and help to keep your worries down all the time. We always recommend to our clients to have at least 3 months worth of bills in savings at all times in case trouble arises.