For those who qualify for a tax refund, the average amount they receive is about $3,000. That's an exciting and much-needed source of extra cash. While it's tempting to take that refund check on a shopping spree, the smarter choice is to put it to work to help you get more money. In this article, we'll show you 5 ways to use your tax refund to become richer:
#1 Pay Down Debt
Your $3,000 tax refund may not be enough to pay off all your debt but it will take care of a good chunk and save you money in the long run by reducing your interest. Let's say you have $12,000 in credit card debt at 18% interest and you can only afford to make a minimum payment of $360 each month. If you didn't put your refund toward it, it would take about 4 years to pay off your debt and you would spend a total of $4,760 in added interest.
If you do put your refund toward your debt and then continue making the same payments, you'd be debt-free in just 2.5 years and you would only pay $2,365 in added interest. That's a savings of $2,395!
#2 Open a Savings Account
Look for high-interest savings accounts that don't have monthly deposit requirements or fees so that you can put your refund in there and then just leave it alone. If you put a $3,000 deposit into a savings account earning 1.8% APY, you'll have an extra $585 on top of your initial deposit by the time your next refund roles around. Keep it up and in a few years, you'll have enough for a down payment on a house, seed money to start a business, or enough money to start an investment portfolio!
#3 Lower Your Insurance Costs
Many car insurance companies offer a lower rate to people who pay their premium in advance. You can save 10% to 20% on insurance costs for the year just by paying it all at once instead of in monthly installments. That's extra money in your pocket and a chance to put the money you normally spend on your insurance premiums each month toward a savings account or paying down debt faster!
#4 Make Repairs
Increase property value and save on damages by using the extra cash from your refund to make needed repairs. A quick tune-up on your car or an annual home inspection can end up saving you thousands by avoiding serious, costly damage later on.
#5 Invest in Your Career
Advance your career by taking a class, getting certified, or completing a training course. You can either take classes that help you qualify for a higher position in your current field or start a training program that will prepare you for a whole new career. This extra cash is your chance to turn your career goals into a reality.
Each of these options will help you either save money or earn money in the long run, setting you up for financial stability and more earning potential in the future. If these smart financial decisions don't feel exciting enough, go ahead and use $100 or $200 to treat yourself and then put the rest toward your future!
If you are burdened with high amounts of credit card debt and are struggling to make your payments, or you’re just not seeing your balances go down, call Timberline Financial today for a free financial analysis.
Our team of highly skilled professionals will evaluate your current situation to see if you may qualify for one of our debt relief programs. You don’t have to struggle with high-interest credit card debt any longer.