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How we spent our tax refund this year – 2018

Introduction

Every year, a greater proportion of population expects to be given tax refunds from the government. In fact, the IRS issued 40 million tax refunds worth nearly $125 billion in 2015 and the average refund amount is $3,120 – a nice chunk of change. These emergency remits and slush funds can come in handy in really difficult moments , but soon we receive these funds, we are thrown into another level of daydreaming and unnecessary spending that will deplete this refund in a twinkle of an eye.  Too, tax refunds are no good indication of your bookkeeping prowess, they are interest free loans to the government over the last year.

Clear Credit Card Debt or an extra mortgage payment

This may not look as ideal to spend tax returns but it is worth it. The truth is that money that money you don’t have to pay others is only worth keeping. Why be in a haste to spend money when you’ve got a bad debt that could tarnish your credit rating. The sooner your debt is paid off, the sooner you get to enjoy the money you make with no worries.

If there are no credit card debts to foot, using your tax refunds to solve pay off some utility bills that are almost due or already due will be worth it. You may also be comfortable with your mortgage payment but never be too comfortable,, making his extra down payment could save you thousands in interest.

Start an Emergency fund

Unfortunate eventualities occur almost every time; we can prevent some but can’t completely protect ourselves from them. Many times, we plan to open an emergency fund where small contributions will be put to act as palliatives in moments of these emergencies, but money never seems to be enough. The expenses always seem to overshadow the income. Your tax refunds could come in handy if all of it or at least, a good proportion is set aside to form a pool of emergency fund. They may look small but remember,” little drops are what make a pool of water”. You could possibly save up towards that major purchase or home renovation.

Invest in you

Not many persons really think in this line, in fact only a handful is mindful of this. The main reason why tax refunds look like a big deal and we wait for it with all enthusiasm is because our income never looks enough. Sparing your tax refund to fund that course you have always wished for or learning that competitive skill could be beneficial in giving you an edge in your workplace or plough in more money.

Save for retirement

Retirement comes with a lot of uncertainties; hence there is no room to be left to chance. It may seem far but rally, retirement is nearer than you could imagine. f you haven’t yet maxed out your contributions to your retirement accounts, consider putting your refund toward that.

Invest

Investments are something we all envy when we see people who do it well, but there’s always a reason why we can’t spare our money towards that.  Investing your money in the stock market or mutual fund would make more sense when it comes to building long-term wealth.

Conclusion

Getting tax returns are not usually the problem but how we utilize them goes a long way. Tax refunds are not financially wise but on occasions when you get them, using this slush fund with more carefulness could go a long way.

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