Tax day is finally past!
Whew! Are you getting a big IRS income tax refund? It’s always nice to get a nice chunk of change coming back to you!
But what will you be doing with your income tax refund?
I’m not always fond of looking forward to a large refund but they do happen and I know some people love getting them. If you are getting a large income tax refund then at least put some thought into how you are going to use that money.
Having a little windfall in the bank is a great thing and when it’s a sizable amount you can really make some differences with your finances.
I came up with some ideas for a large income tax refund. I’ve broken it out into different sections to make it easier for you to find something of interest. Here goes:
25 Ideas for Your Income Tax Refund
1. Pay off credit cards – If you are carrying credit card debt then a large tax refund can be your opportunity to put a dent in or eliminate your credit card debt. Pay it off and you save by not paying as much interest charges! Think about it – if you are paying interest on your credit card debt then you are slowly eroding your potential for wealth. Go attack that credit card debt!
2. Pre-pay mortgage – You can take that refund and pre-pay your home mortgage. You may be able to do an extra month or better. Not only does this payoff the principal on your mortgage quicker but you also save on interest payments over time. You really have the potential to save thousands here.
3. Pay off student loans – If you have private student loans then now is a great opportunity to pay some off. Why private student loans? Those tend to be the ones with the higher interest rates. Even if they aren’t private loans you can still make some extra payments to help get rid of your loans earlier!
4. Car loan - Pay off all or at least some of your outstanding car loan. Make sure the payment goes toward the principal.
5. Contribute to an IRA – Get money into your IRA now so you aren’t waiting until the last minute next tax season. A Traditional IRA will give you tax breaks now while a Roth IRA gives you tax breaks when you retire. Add a little padding to your financial future now so you don’t have to worry so much later on.
6. Contribute to a 529 plan – Not only are you investing in your children’s college future but many states offer plans with tax advantages.
7. Put it into a high-yield savings account – Sock it away and earn better interest than you would n a brick and mortar bank. (Check out some great offers and bank rates for high-yield accounts.)
8. Purchase CD’s – Set up a CD ladder for continued returns.
9. Start a small business – It doesn’t take a lot of money to start up a small side business. You could eve try your hand at creating a website!
10. Build up your emergency savings - If you don’t already have 8-12 months of emergency savings away then now would be a good time to start!
11. Invest in stocks – Take a small amount that won’t hurt you if you lose it and learn to invest in stocks. You can open up an inexpensive online brokerage account. (Check out Sharebuilder, TradeKing, and some others for low cost trades).
12. College Course - Register for a college course or technical course. This could be for your own interest or as a way to help advance your career. Think about it, you might be able to take a course that could potentially put you in line for more money in your career.
13. Travel/Vacation – Take the money and run! Ok, maybe not like that but it could be a nice chance to plan out a great vacation with the family! I’m always one for saving but building great memories with your family is important too. Everything in moderation.
14. Fix up your home – Paint, renovate, upgrade appliances, get new furniture – make your home a nicer place to live in. Some renovations can yield tax breaks while also building up value for your home should you ever want to sell.
15. Set up a fun money account - Take the refund and put it into a sub account in Capital One’s online 360 Savings (or similar savings account). Label it fun money. Throughout the year take money out to do things like go to the zoo, amusement park, museum, movies, etc… This way you have that money set aside and you aren’t reaching into other funds you may need or worse, using credit you might not be able to pay back quickly.
16. Upgrade your work wardrobe – Replace some of those worn-out threads. It can make you feel better at work as well as look better to get you noticed. A few quality pieces might be all it takes to improve your wardrobe.
17. Take care of the car – Get your car a tune-up and a full detail cleaning. Taking care of your car will help it last longer and perform better saving you money in possible future repairs. It will also help the re-sale value of your car should you want to sell it.
18. Grow a garden – I love our modest garden. It’s so relaxing and satisfying taking care of it. You get an extra bonus if you can grow your own vegetables to eat!
19. Donate to charities – Give money/time to those who need it more!
20. Eat better – Have you been telling yourself that you would eat better if you could but it’s too expensive to eat more natural and organic? Put the money aside to buy better food for yourself and build up better eating habits.
21. Enroll the kids in an after school or weekend program – Sign them up for martial arts, little league, soccer, music, swimming, dance, etc…
22. Take up a new hobby – Learn a musical instrument, play chess, learn a language!
23. Get together with old friends - Call up some of those old buddies and treat them to a night out to the local pub or to a local sports game.
24. Take your spouse out on a date – Hire a sitter and treat your spouse to a night on the town!
25. Do something you’ve never done before – Think outside the box and stretch your boundaries.
Of course these are all suggestions.
Make sure you think seriously about what you will do with your income tax refund. Don’t be impulsive and let that money burna hole in your pocket. Be responsible and take care of debts. If you have money left over then consider some of the fun things you can do.