2017’s average refund was $2,895 for nearly 80% of the nation. That’s a decent amount of cash and opportunity for you to get the most out of your tax return.
In the past, you might’ve felt like the money came in and went right back out, and you were left with nothing to show for it.
South Suburban Currency Exchanges is here to help! Here are five great ways to get the most out of your tax return and know your hard earned money wasn’t wasted.
1. Pay Down Credit Card Balances
Those credit cards can be pesky and extremely hard to get rid of. Pay down your credit card balances with high interest rates. High interest rates keep you spinning your wheels and prevent you from being able to pay off your debt sooner.
Go after credit cards that have an interest rate of more than 10%, and start paying them down. You should always pay down the card with the highest rate first, and if you pay one off, cut it up. This protects you from paying that high interest rate on your purchases with that card again.
Make sure to read the do’s and don’ts of closing a credit card before you close that card you just paid off!
2. Gain Ground on Principal Balances
Car loans. Student loans. Mortgages. These all have something in common: your payments apply towards both the principal balance as well as the interest. Another great way to get the most out of your tax return is to pay towards those principal balances. It’ll save you in interest paid down the road.
Apply a lump sum payment to the principal balance of one or more of your loans. But be careful: you must make sure to specify it is a payment on the principal balance only.
You can stretch your tax return even farther by paying lump sums on several principal balances.
3. Establish An Emergency Fund
Emergencies always arise. Cars break down. Appliances stop working in the house. Unexpected trips to the doctor happen. When emergencies occur, it can easily put us in a financial bind. That’s why it’s important to establish an emergency.
An emergency fund should have, at minimum, 3-6 months worth of pay. It might sound like a lot, but having enough in your fund will protect you when the times arise.
Your tax return may not be enough to fully fund this, but at the very least, it will get you a lot closer than you are right now.
4. Fund a Roth IRA
Did you know that the average person needs to save $1.18 million in order to generate $40,000 a year after retirement?
Does that sound scary to you?
There’s good news: a Roth IRA is the perfect place to start investing. Roth IRAs are individual retirement accounts that allow tax-free withdrawals after the age of 59 ½. There is a limit to how much you can place into your Roth IRA account each year: $5,500.
Get the most out of your tax return by beginning to fund a Roth IRA today.
5. Invest in You
You’re about to get something back for all the hard work you put in the last year. While we recommend getting the most out of your tax return by applying it towards our previous options, we also understand how the opportunity for a recharge can provide someone a positive outlook for the rest of the year.
It doesn’t matter what you choose, but find something you relish. We all enjoy rewards of a job well-done, so consider using your tax refund in a way that rewards you.
Here are some ideas:
- Take a vacation
- Pay for an annual spa membership
- Fund your hobby
No matter the how you choose to get the most out of your tax return this year, make sure it ultimately gives something back to you in the long run.
At South Suburban Currency Exchange, we offer prepaid debit cards that make it easy to keep track of your funds until you decide where you want to spend your tax return.
Have a paper refund check? No problem! Our staff members are happy and ready to assist you with our check cashing services so you can be on your way quickly and with your cash.