Top Five Ways to Spend Your Tax Return This Year
Catch Up Bills
If you are behind on any bills, you need to use your refund to get these caught up and get your finances on an even keel. Hopefully, you're already all caught up and can skip this step.
Emergency Fund
Next step is to fund your emergency fund. At the very minimum, you should keep $1,000 in your emergency fund, but it is best to have three to six months of expenses saved in case of emergencies or job losses. If you already have this saved, you can move to the next step.
Pay Off Bills
If you still have outstanding debt and your emergency fund is fully funded, work on paying off bills. There are two ways you can do this. Pay off the balances with the highest interest rates first, and then work your way down to the ones with lower interest. Or, you can pay off the debt with the lowest balance first, and then work your way up from smallest to largest. Either way is fine and accomplishes the same job.
Save/Invest
You can also save or invest your tax refund. This is always a smart option, but remember to seek the services of a qualified. licensed financial counselor before making any of these decisions.
Splurge
And the trusty old stand-by - splurge on something fun. Just don't overspend and go into further debt.
Remember that it's best to have a tax refund of 0, so you are getting to use your money during the year, not letting the government draw interest on it. Your financial advisor or tax professional can help you adjust your withholding properly to make this happen.
More from this contributor:
Common Retirement Mistakes I've Seen as a Retirement Advisor
Tips For Paying Off Your Holiday Bills
How to Get Great Deals When Shopping Online During the Holidays
Published by Maggie OLeary - Featured Contributor in Lifestyle
Maggie O Leary served on active-duty in the United States Military from 1997 to 2010, before joining the Reserves. She is currently attending college full-time, pursuing a Bachelor s Degree in History. In ad... View profile
- 10 Tips to Get a Maximum Tax Refund from 2008 TaxesTen tips that will help you in making sure you get the maximum tax refund that you can for 2008.
Why Instant Tax Refund Loans Are a Bad IdeaMany companies now offer rapid tax refunds or debit cards, which loan you your tax refund in advance. Here are the reasons why these are a bad idea.- Three Things You Can Do with Your Tax Refund to Help Your FinancesMany Americans will be receiving or have received their tax refund. The money, even a small amount, can help your household finances.
Income Tax Refund: How the New Tax Law Might Delay Your Refund but Get Y...On Dec. 17, Congress passed the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010--also known as the unemployment extension by some. This new law m...
Exclusions, Deductions and Credits on a Maine Income Tax ReturnIf you live in Maine, or have income from sources in Maine, you may need to file a Maine state income tax return. The Maine return is similar to the federal return, but there ar...
- Helping Senior Citizens Pay Their Utility Bills
- Why Do You Need an Emergency Fund
- The Best Way to Spend Your Tax Return
- Tax - Can You Include Your Child's Income in Your Income Tax Return?
- How to File an Income Tax Return Extension Form
- Tips to Get the Best Tax Refund - Are You Doing This?
- Making Your Income Tax Refund Count