If you’re one of the lucky people to get a sizeable tax refund this year, you could be wondering what the best use of that money is! Our first thoughts always stray to luxury items like televisions or just hitting the mall, but one of the better uses of your money is to use your hard earned tax return money to pay down any debt you may have accrued (especially during the holiday season!).
Sometimes called a credit or holiday hangover, people tend to have the most debt directly after the holiday season. In fact, scientists have figured out the most depressing day of the year and it is when the holiday credit card bills start to roll in! A lot of time, this holiday hangover is related to a lack of pre-planning or saving prior to the holiday season, or overspending on what you had originally planned to do. Most of this extra spending will be put on a credit card
However, especially if you’re among the people who get the Earned Income Credit on their tax return, you may be set to get a significant tax refund from February to April. Before you’re tempting to waste it all on things that might sound good but that you don’t necessarily need, take a look at your credit card bills. Don’t just pay the minimum! If possible, pay off the entire balance and then plan better next year. If you have leftover money, then buy that television or go to the mall and get new clothes!
There are some ways to help budget better for the holiday season, as well, so that your entire tax refund can be earmarked for more fun things in 2018, like vacations or luxury items! Try putting a small amount away every paycheck, preferably in a “Christmas Club” savings account that can’t be touched until December. This ensures that you have that money when you need it and you aren’t tempted to dip into it during the rest of the year. Also, it’s helpful to establish a budget. This can also help you to see if there are any expenses that you can cut back on to increase your savings. There are many budgeting programs and applications you can download onto your phone that can help you tackle this seemingly enormous task (Mint is a good one). Once you know what you’re spending, you can prioritize your bills and extras.
If you don’t have any holiday debt (congratulations!), try to use your tax refund from your 2017 tax return to pay some of your bills ahead before splurging. Cable, internet and cell phone bills, as well as mortgage payments, can all be paid a few months ahead so that you can direct that money towards savings or a higher payment on your credit cards.
Please visit www.taxreturn247.com.au for additional tips and information on how to really make the best use of that tax refund money from your 2017 tax return!