You got it! The money is in your account. It is even more than you thought. So, should you pay off some debt? Maybe you should invest it and let it grow. But, the flat screens are all on sale and the promotional financing ends this weekend. What should you do with it? Here is what you should do and why?
The best financial decision for most people is to pay down credit card debt. There are several reasons why paying down credit card debt is the best option for a tax refund. click here for more details.
First, a tax refund is not “free money” even though it feels like it. It is your hard-earned money. You just paid too much of it to the government during the year. If you receive a refund, use it as an opportunity to make up for any over spending or investment and savings shortfalls you planned to make during the year. There are so many people that don’t know what to do with their tax refund and don’t even know how important it is. It is very important to educate people about tax refund and what are their advantages.
Second, there is no risk-free investment in the world that does not have any transaction costs or minimum investment yet a guaranteed rate of return of 10%-25%. So, there is no way you can invest or save this money and get a better rate of return than the savings of paying down credit card debt. Investing with your tax refund is essential and be prepare in using it anytime. for related details, visit : https://iss.washington.edu/tax-information
Third, and perhaps most importantly, paying down credit card debt is the single best thing you can do to improve your credit score. Improving your credit score even a few points can save you thousands on a home loan, car loan, insurance premiums, and even your credit card interest. Your credit score could even mean the difference in getting a job or promotion. Paying down revolving debt can increase your score as much as 100 points in some cases.
Finally, if your tax refund is quite large, ask your CPA or boss about changing your W-9 form to lower the amount of money the government takes from each paycheck. You can then use this money to pay down your credit cards sooner or save the money to earn interest during the year. There is no reason to let the government hold your money and earn interest on it.
For those of you who do not have credit card debt, congratulations! Here is what you should do:
Create a savings account of emergency cash reserves with 3 months of living expenses.
Save another 3 months worth of living expenses in a 3-month CD.
Add the money to your IRA or retirement account.
Invest the money in a non-retirement account.
If you already have 6months of liquid reserves, maxed out your retirement, and have other investments and savings, then you can spend it. However, if you get this far, you will probably invest it anyway.…
Getting an income tax refund back this year? Take some advice from one of my financial advisor acquaintances; use you tax refund to start that business venture. Sounds like commons sense, right? I would say yes to that as well, but you’d be surprised how many people just spend their tax return on something that will only put them farther into debt. click here for further information.
Isn’t one of our goals in life is to make sound decisions so that we can be financially independent? Isn’t it our dream to not have to work for someone, to be able to wake up in the morning and YOU make the decisions of what is going to happen that day? Shouldn’t our financial decisions reflect our dreams and goals? I say yes to all the statements above.
I have a very savvy entrepreneurial friend of mine who has one of those minds that is constantly thinking of ways to make life easier and more lucrative. When he has a good idea, or something to say, I usually listen to him. More times than not, his thoughts or ideas have come to fruition and have made him an extremely wealthy man. I have known this gentleman for almost ten years now. I knew him when he actually had a job that he had to work Monday through Friday. Over the years, I watched him make decisions that seemed pretty risky at the time, only for him to come out on top with a big smile on his face. A few years ago, he did something that I thought was completely crazy; started a home-based business as a multi-level marketer. I have heard so many negative things about organizations like this, but after seeing his business grow; I had to eat crow. for more information, visit : https://uca.edu/international/tax/
About a year ago, I joined his organization called Carbon Copy Pro. Then I was just called Carbon Copy. You may or may not have heard of the organization. After a few short months, and with the help of my friend, I began making lots of money. I began to find friends that had the talent and know how to become successful in an organization like this. I became friends with a great financial advisor and have been friends with him ever since. In the past few years, we would meet for lunch and talk about how each was doing. He gives me tidbits of insider information, and in turn, I buy his lunch. It’s a fair trade in my opinion. Just a few weeks ago, was the most recent time we met for lunch. He was impressed with how well I was doing with my marketing campaigns. I told him that more people should try this, and even got him to think it over for himself. Once I told him what Carbon Copy Pro was all about, he told me that it was a sure winner. “With as little as it cost to get started, I’m surprised more people don’t use their tax refund to start this business venture,” he said. I couldn’t agree more.
I’m not trying to sell you on anything, and I’m sorry that this sounds like a marketing pitch, but I, along with a few of my friends, have been very successful with this. There is no better time than the present to get started. Don’t waste your money on something that won’t give you anything in return. Make your money work for you, not the other way around.…
Do you get a tax refund every year? Well, this is not going to be a discussion about whether you should or should not receive a tax refund. Rather, these are tips about what to do with a tax refund, should you receive one, while you Erase Debt. So here are 5 Things To Do With a Tax Refund. click here for more about tax refund.
Pay Off Debt
If you have any consumer debt, like credit cards, car loans, student loans, home equity loans, then the best thing to do with a refund is to erase that debt. Throw whatever amount you received via a refund at that debt.
Unfortunately, being the smart, intelligent human beings we think we are, our first thought is to save the money. Why throw the money away to pay off debt when you can save it in the bank, right? The truth is, if you were that good at saving already, you would have lots of money in the bank and no debt. And guaranteed that a few months after receiving the money, you will get the itch to spend the money on a vacation, new clothes, a new mountain bike, or the latest gadget. You will rationalize the purchase. And most likely the purchase will be more than the refund you received, which means you will turn around and put any remainder on a credit card.
So, instead of having money in the bank, you will just have more debt. Oh, and you’ll have that not quite paid for item you purchased. To get out of debt and to stay out you must change your behavior. And in this case, to do that requires starting by paying off your debt. Once you start doing that, you will see how easy it is to do and you will continue doing it until you are out of debt completely. Only then, with your money behaviors changed for the good, will you truly be able to save money. for more details, click on : https://oie.gatech.edu/nrtaxes
Build Up an Emergency Fund
A tax refund is also a good way to start an emergency fund. If you don’t have a starter emergency fund yet, well, now you can. Or, if you already have a starter emergency fund, and all of your consumer debt is paid off, then grow that emergency fund even bigger. You’ll be on your way to a 3, 6, 8-month or more emergency fund.
Start an Education Fund
Already have your debts paid off and an emergency fund in place, then use the money to start an education fund for your children. Use the money to open a 529 plan or an Educational Savings Account.
Start an IRA
Open an IRA (Individual Retirement Account) with your refund, especially if you have a 401k at work already. It is just another investment vehicle to get you to your retirement goals.
Throw It At Your Mortgage
Alternatively, throw all of your tax refunds at your mortgage as an extra payment and lower the principal owed on your house. This will put you a few months closer to paying off your mortgage. Just be sure to tell the mortgage company that you want it all to go to principal.
Erase debt and build some wealth by using your tax refund to pay off consumer debt, increase your emergency fund, start an education fund, begin an IRA or accelerate the payoff of your mortgage. And, if all of the above is already done, then just leave the money in the bank. Better there than in some other person’s pocket.…