Tax Returns Are In, Should I Spend It All Or Save A Little Money
We are just a couple weeks past the national tax filing due date. Most of us who filed will be seeing a return. With that said, there are tons of people that wait for this time of the year, every year. But, this year, what do you plan to do with the money? Will you be buying a new car, paying off debts, putting it into savings? Are you going to spend some and save the rest? Well, before making that decision, there are a few things that you are really going to need to think about. Here they are…
If You Want To Spend The Money, What Are You Going To Spend It On?
Some people just go on spending sprees with their tax returns. An idea that, just isn’t a financially wise one. If you are going to spend the money on a necessity, something like repairing your car, paying for daycare in advance or even going to the dentist to finally get your tooth pulled, that’s probably a wise decision. However, if you are going to go to the mall and buy anything you find interesting, you might want to think twice. Think about what else you can do with the money. You may be able to pay off debts, put it into savings or spend it on other, more important things.
If You Want To Put Your Tax Return In Savings, Strongly Consider The Following!
Chances are, you have debt. Let’s face it, the United States economy was built around debt. Therefore, if you don’t have debt, you are one of the lucky few! With that said, when you put your money into savings, you do it to earn interest but; if you pay higher interest on your debts, you may want to consider paying your debts first. This way, your money does more work for you by helping to eliminate a debt that costs you interest. The truth is, if you have a $10,000 debt at 16% interest, you could save thousands in interest over the life of your debt by making a principal payment of $2,000 today.
Considering Paying Off Your Debts, Think About This!
If you are one of the lucky few without any credit card debts, chances are, you want to pay down your auto loan or mortgage. However, some, long term investments may pay higher rates than your average mortgage or auto loan. This, of course depends on your credit score. However, if this is the case for you, paying off your debts may actually be costing you money! This is because by investing in higher yield accounts, you can be earning more money than you would be paying in interest rates!
Final Thoughts
There are tons of things that you can do with the money you get back for your tax return. But, it’s important when dealing with money to never make a rash decision. Before deciding how you are going to use the money you receive in your return, you first need to really gauge the best way he leverage the money you have available to you. This all goes back to the commonly stated quote, “Make your money work for you!”. Thanks for reading and come back soon to read more of my work here at Save A Little Money!
About The Author – Joshua Rodriguez
This article was written by Joshua Rodriguez, proud owner and founder of CNA Finance and avid personal finance journalist. Join the conversation about this article on Google+!
Category: Family Finances, Financial Planning
