What to do with your $2,869 Refund
According to TurboTax the average refund for early filers is greater than those that file on the April 15th deadline. Early tax filers get an average of $2,869 in tax refunds versus $2,753 for those who file later. (see here) For most of us, that's a lot of money. So what are you going to do with your refund? Well, first and foremost, I'd say adjust your withholding. Many of us like having that refund check every year. Some of us even consider it a savings tool. That kind of thinking, though, is ridiculous! Have you checked to see how much Uncle Sam pays you in interest for that money? Zero, zilch, nada! So why pay extra in withholding when you don't have to? If you have trouble saving, try setting up an automatic savings plan with a high yield savings account or make automatic payments to your IRA account. (see my Recession Survival Guide for more tips) After that, I'd suggest putting your refund to good use. Don't splurge on something you really don't need. Here are some tips on what to do with your income tax refund.
- Pay off debt: This is a no-brainer. If you have credit card debt, pay it off first. Then, cut it up and never use it again! (maybe a little extreme, but you know what I mean)
- Spend it on smart resources: Get a warehouse club membership. Examples include Sams, Costco, BJ's, etc. If you're investing your own money, subscribe to some newsletters, publications, or services that you might not normally subscribe to. Subscribe to the Wall Street Journal (tip: this is also a deduction for next year) Buy a do-it-yourself book to make those repairs you've been putting off. (tip: buy it used at Alibris and use a coupon on your purchase)
- Go Green: Look for home improvement options that can improve energy efficiency or reduce your utility bills. Check out our Go Green savers page where we not only offer tips on energy savings but also help you save money on making those improvements with exclusive "Go Green" coupons.
- Invest in your future: If you have an IRA plan, make a contribution to it. The more money you save now, the more you will exponentially have later. If you don't have an IRA plan, consider opening up one. I have my IRA plan through E*Trade. It was simple to set up and took a matter of minutes.
- Invest in your kids' future: To quote Suze Orman, "Take care of yourself first, then take care of your kids' future." If you're already putting money towards retirement, put some of your refund towards your kid's college fund. The 529 plan is also a tax deduction.
- Refinance your house: The interest rates are still remarkably low. If you plan of staying in your home for the next 5 years or so, refinance your loan. I suggest using LowerMyBills to find the cheapest lender.
- Quit a habit: Are you still trying to quit smoking? Get some help from Drugstore.com and save money while doing it. (tip: check out our coupon section for a $5 printable coupon for Nicorette)
- Invest in yourself: Learn a new skill or hone your existing skills. Example: Software experts are always in high demand. Check out Total Training for some great software training aids.
- Take a much needed vacation: I suggest either a cruise or an all inclusive resort if you want to go somewhere exotic. For more travel tips check out our Online Travel Savings page.
- Start a new business: Have you dreamed of starting your own business but have put it off because you didn't have sufficient capital? Use your tax refund money to help start a new business. Plus to help you save money on your business expenses, CouponShack.com has a great Small Business Savings Center that's filled with tips and coupons.
Whatever you do with your tax refund, just make sure you put it to good use. Use these tips to really get the most out of your refund. You'll thank yourself later!
Posted by Sok on March 18, 2010 Tags: Travel Savings , Small Business Savings Center , Income Tax Savings
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