It’s that time again. Either you’re giving money to the IRS or you’re one of the lucky few who are getting money back through an income tax refund. If you’re in the latter category, the big question you’ll be faced with once you receive your government windfall is what to do with the money. Following are ten of the most popular suggestions for spending your hard earned income tax refund.
1.Save
Putting money away in a savings account may sound boring but it’s a smart move. Because a tax refund is money you didn’t have before, most people find they don’t ‘miss’ their tax refund if it’s put directly into a savings account. See what kind of interest rate your bank is offering on savings accounts.
2.Invest
With the current state of the economy, putting money away in investment vehicles might be the perfect thing to do with your income tax refund. Buying stocks and bonds when prices are low will help you reap the rewards when the market rises. See what is going on in the stock market, get advice, and keep up with your stocks at Yahoo Finance.
3.Home Improvements
Whether living in houses or apartments in Houston, doing things to spruce up your home is never a bad idea. While you may not want to spend a lot of money on improvements if you’re living in a property you don’t own, you can always spend your income tax refund buying accessories such as window curtains, bedspreads and furniture to give your home a whole new look yet can be packed up and taken with you when you move.
4.Tackle Credit Card Debt
Credit card debit is something most people have. Whether you have a little or a lot, paying off high interest credit cards is a good way to use your income tax refund. Below are some sites that can help you simplify your budget and decrease your debt.
- How I Ended My Affair with the Credit Card
- 73 Great Debt Elimination Tips
- 10 Ways to Simplify Your Budget
5.Start a College Fund
How about using your tax rebate to start a college fund for your children? Even if your youngsters are toddlers, it’s never too early to start putting away for their education. Check out these college savings plans offered in Texas:
6.Put Money Away in an Emergency Fund
Most people don’t want to think about the prospect of losing a job or what they would do if an unforeseen large expense popped up. Yet losing a job or having to pay money for an unplanned expense can put people in a very bad financial position. Consider putting your tax rebate into an emergency fund so that if you face a sudden need for money, you have some socked away.
7.Open an IRA
An IRA (individual retirement account) is a personal savings account to be used for retirement purposes. This type of account also provides tax advantages to individuals who are looking to save money for when they retire. This is a great option for people who do not work outside the home or have jobs that do not offer retirement plans. It is also a great option for those who simply want to put even more away for retirement than their current retirement plan will allow. IRA’s are more flexible than you probably think. Take a look at the 5 Different Types of IRA’s:
- Traditional
- Education
- Simplified Employee Pension (SEP)
- Simple
- Roth
8.Buy a Car
Fuel prices are going up which means buying small is in. If you’ve considered buying a smaller or new vehicle, using your tax rebate as a down payment might be a great way for you to make your desire for a new vehicle a reality. Below are Edmonds.com Top 10 Most Fuel Efficient Cars of 2007. Perhaps this list can help you decide what kind of fuel efficient vehicle fits your budget in 2008.
- Toyota Prius
- Honda Civic Hybrid
- Toyota Camry Hybrid
- Toyota Yaris
- Toyota Corolla
- Mini Cooper
- Hyundai Accent/Kia Rio
- Honda Civic
- Nissan Versa
9.Refinance Your Home
Understanding home financing can be as easy as understanding taxes. However, if you’re currently paying a mortgage with a high interest rate, using your income tax refund to refinance to a lower interest rate might just be the key to saving a lot of money in the long run.
10.Take a Vacation
Not considered one of the more popular suggestions for tax rebates, taking a vacation is simply a chance to have fun and relax, either by yourself or with family. Taking time to re-energize yourself can give you energy to do the things you need to do and make you, overall, a happier person.
Whatever you do with your income tax return, considering giving thought to each of the above suggestions. Then decide which option is right for you and your family.
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