By Delta Jones-Walker, Gary Crusader
It’s tax season! For those who are anticipating a refund, it may seem like an unofficial Christmas. However, I strongly suggest that you pump your brakes at least until you’ve read the remainder of this article, which offers tips on what to do with these extra funds.
Before you let that tax money burn a hole in your pocket, remember that the government is not giving you a bonus check! It was your money all along! Make time to meet with a representative in Human Resources at your place of employment to go over the am-ounts of your deductions and exemptions on your W-4 form. Perhaps too much is being taken out every two weeks. Instead of waiting on the return, you can have access to your own money throughout the year.
Here are a few suggestions on how to use your return to yield financial growth in both the short and long term:
- Start increasing your emergency fund.
What if your car goes out or you need to travel due to a family emergency? Do you have the cash to do this or are you going to run up another credit card? Putting money away for “just in case” is one of the smartest things to do with your tax return.
- Pay off high interest debt.
Whether it’s a credit card or some other type of high interest loan, take your refund and make a dent in your debt. Begin by paying your smallest credit card debt off first.
- Start an itemized savings account.
You can never go wrong with saving, but opening a separate account allows you to see your wealth grow. By doing this you will not comingle your funds with the dollars in the general account that are used to pay bills, splurge, etc.
- Donate to a charitable cause.
It is always a great thing to give back. Not only does your charitable contribution help others, it makes you feel good, and it’s tax deductible.
- Start a business.
We all have some type of talent or passion. Why not turn that passion into a profit? Use your tax return to get started. Rent/purchase equipment, secure office space and/or develop a business plan, etc. In short, go chase your dreams!
- Refinance your home.
As of late, the interest rates on mortgages have been on the decline. Contact your mortgage broker and find out if you qualify for a lower interest rate. Upon refinance, use your tax return to pay the closing costs and fees. You will save thousands of dollars over the life of the loan by taking this simple step.
- Treat yourself to something nice.
I know you didn’t expect to see this one! But it’s okay to buy something for yourself or a loved one within reason. Just make sure that you can afford it and that you don’t create more debt as a result of a major purchase.
By now, I hope you have started to rethink your plans for your tax return while keeping the most important point in mind: It’s your money, so make it work for you!
Happy tax filing!
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