It’s that time of year again, when most of us get a nice big check in the mail. So, what are you doing with your tax refund?
It’s easy to see a number larger than most of us see in our accounts at one time and think we deserve to go on that shopping spree and buy those shoes, or truck, or, well, just about anything we may have been drooling over in the past few months. 🙂 And I’m not shooting down a few small purchases for fun. But what else could/should you do with your tax refund?
7 Things you could do with your Tax Refund:
1. Save. You should have enough funds laid by to get you through 3 months. Most of us don’t have even one month. But, if you take half of your refund and put it into a savings, suddenly you have a nice little emergency fund.
2. Credit Card bills. Interest rates on credit cards are well, crazy. But I’m sure you don’t have to be told that. 🙂 If you have excess credit card debt, consider making one or even two extra payments from your tax refund.
3. Mortgage. If you have credit card debt, use your tax refund to make extra payments. But if you don’t (yay for you!) consider making an extra payment on your mortgage. We were told when we bought our house, that one extra payment a year would drop a 30 year loan to a 21 year loan! Obviously, that number will differ depending on your interest rate and amount borrowed.
4. A special fund. Long before I even knew who Ramsey was, I was “stashing” money, in envelopes! Now we have a separate account for our “fun” money, but that is what we use to do things like eating out, vacations, and even things like bowling or movies. You could put a small amount of your tax refund into a “fun fund”. 🙂
5. Big ticket items. This year, we had to put a good chunk of our refund into vehicle repairs. We both drive older vehicles with well over 100,000 miles and they needed some work done on them. Now was a great time to do it because we had the money. If you are needing to replace appliances or other household stuff, using your tax refund to do so, would save you having to pay off more credit card or store debts.
6. Charity. Now is a great time to give that additional bit of support to your favorite fund, or charity.
7. Treat. A very small amount of your tax refund could be used for treating yourself. Maybe a special date night with the love of your life. Or a family dinner at your favorite restaurant. or, those new shoes. 😉 Don’t go overboard, but sometimes a little treat can make you feel a lot better and help you focus on wisely spending or saving the rest of your tax refund.
We are called to be good stewards with all that we own. This of course refers to money as well. The most important thing is to be aware of your finances, don’t just let your tax refund go to your bank and mix with everything else. Pay attention, when your refund arrives, make sure you do something with it on purpose. Because if your don’t intentionally use your refund, you will unintentionally spend it, until once again, you have nothing left.
What do you and your family like to do with your tax refund?
Very good tips Kendra! I like them all!
We are using ours to pay the house taxes early,and the extra house insurance early,and an extra Mortgage payment.
Then we put a little in sons savings account,and rest back for emergencies
Wonderful decisions! I love being able to pay ahead on stuff 🙂
good ideas! Every year we just send it ours straight to savings as if we never got it. We are a young family and saving up for a house so it gets us one step closer! Hoping to be able to buy next summer, if we continue to save at this rate (or more) and continue to stay out of debt!
That is great! Last year we were able to do that. This year, truck repairs got in the way, but it was nice to be able to do the work that needed done without pulling from savings. We too are saving for a house. We have one now that is really nice, but we want to be in the country. 🙂
We used ours to pay down and pay off bills and to splurge on a few items we want and some that we need. We have some left in savings.
That’s awesome! It’s nice having a bit to splurge with. 🙂
We use our refund to pay our annual land payment. Any extra goes to bills.
We are putting our tax refund toward a heat pump for our house, to take our winter heating bill down a good chunk. That way we will have extra money each month, through the approx. 7 months of cold, that we can put toward our Dave Ramsey plan!
I always pay my house insurance with it…pay it one lump sum annually in the spring instead of monthly.
Great tips Kendra! We did #2 which helps us to be free of credit card debt by the end of this year! Thanks for sharing this at the party this week. I am also featuring it on my Facebook page 🙂
We are going to be paying off a credit card and paying down a car loan
No refund for me but this is the time of year I get lots of chances to do extra babysitting and catch up my little bills while everyone goes and blows theirs
Haha! I’m a nanny and babysitter as well and yes, I’m doing good at the moment. 🙂
Have not filed yet, still waiting on a 1099. Not sure what will be done with the refund yet though.
What a great article. We were going to put some aside, but now have to have a new roof! Oh well, at least we don’t have to borrow the money to get the roof!
I am sorry it took me so long to come by and thank you for linking up to Living Big on Less Money. I hope you will come back and link up some of your other great frugal ideas! Thanks so much!
Cynthia at http://FeedingBig.com
Thanks Cynthia, we actually had the same thing happen to us. It was meant for savings but over half went into vehicle repairs. Like you we decided to just be glad we didn’t have to borrow.
My state tax return check is usually pretty small, so I splurge and buy myself a cd or something I’ve been wanting with that. The federal check goes in the bank. I’m hoping to have a big down payment saved up before I need a new car.
Yeah, our state return is generally pretty small too. And having a down payment for a new car is great! I am determined that when we next need a new vehicle we can pay straight cash…. I hate car payments.
We used a portion for fun, a portion to stockpile some things for the pantry and linen closet, replaced my hubby’s t-shirts, undies, and socks (they were old and ragetty). I socked a big chunk away in savings. We’re also getting a much needed mattress replacement.
Mattress replacement is a good idea. Ours is looking pretty nasty and it’s well broke in. 😛