Tax Refund Time!
I hope you have a big tax refund coming! (If it’s too big—instead of Goldilocks’ ‘just right’—you might want to trot down to payroll and file a new W-4.) Why is it that getting money back from the government feels sooo good? I mean, it’s our own money, not the government’s, right? But still a big tax refund feels like an unexpected gift, like an inheritance from a miserly, distant uncle, just deceased. I think many people purposely ask their employer to withhold too much tax just so they can get that addictively blissful tax refund feeling each spring.
Tax Refund Bliss
Why do we so enjoy tax refund feel-goodness? One reason may be the first sensation we experience: time to party and spend with this found money, woot woot!
Hey, I like partying and spending as much as the next guy—okay, well, not really, but let’s pretend I do—and I’m not going to be the one to pee on your tax refund party, but c’mon: in our refund bliss, we shouldn’t forget totally that we also maybe, probably, certainly will want to retire someday! Maybe we can take at least some of that big refund and advance the comfortable retirement goal, whaddya think? I know—that sounds pretty boring and tax refund bliss killing. Yeah, but just think how happy your 70-year old self will be. 🙂
5 Best Sensible (if boring) Ways to Use Your Tax Refund
1. Pay Down Debt
If you have debt with an APR over, say, 5%, take a whack at it with part of your tax refund. The cool part of this strategy is that you’ll have more spending money. Example: pay off $1,500 in debt with a typical 23% credit card APR, and you’ll have an extra $350 over the next year that would have been wasted on credit card interest!
2. Build an Emergency Fund
With no emergency fund, you have no choice but to borrow when big, unexpected expenses come along, as they always do. So think of an emergency fund as insurance against getting caught in the high-interest debt trap.
3. Fund a Retirement Account
4. Make a Holiday Fund
Christmas is only 270 (or something) days away! Putting holiday fun on the credit card makes Santa sad.
5. Donate to Your Favorite Charity
Surprised you with this one, didn’t I? You can’t go wrong by using a bit of your tax refund windfall to help improve your community or the world or those less able to get by.
Are you getting a tax refund? What will you do with it?