Make the Most of Your Tax Return and Create a Plan it Before it Arrives
We have arrived to another year and another tax season. You may have already filed your taxes and are awaiting your tax return, or are preparing materials to submit. While you are waiting to receive your tax return, start making a plan for the money that you will receive.
Pay off debt
One plan for your tax return could be using that extra money to pay off some debt. The type of debt to take care of would be any collections or outstanding payments that are owed. Other options could be paying off a credit card with a smaller balance or making one large payment toward a loan. Paying off debt will help you save money on interest. Lowering the amount owed on loans and credit cards can have a positive impact on your credit score as well.
Put the money in savings
Putting part or all of your income tax return away for a rainy day is another smart idea. You will be really happy if you have an emergency fund started when expected expenses arise. You can even consider starting a certificate to earn higher dividends off your money versus a regular savings account.
Use that refund to get ahead on your monthly expenses. Pushing fixed monthly expenses forward a month, such as your car loan, rent or mortgage, and other fixed monthly bills, can give you a really nice cushion for anything life throws your way.
Start a side hustle
Use your tax return as seed money to start making extra income. Think about what skills or hobbies you have that could make you a profit. Use this extra money to start buying supplies to create a product or provide a service.
Tax season can be a time to catch up on regular maintenance of appliances, vehicles or home. Servicing your vehicle or household appliances will help keep them in working order and extend their life. Your tax return could also be put to good use on home improvement projects.
You can always visit www.msufcu.org/finedu/ for more financial education tips throughout the year.