Filed under Money on March 23rd, 2009:
Wise Ways to Spend Your 2008 Tax Refund
Many people look forward to tax season because they know they are getting a refund, and a lot of people have big dreams for that money – taking a vacation or buying a new big screen TV. Sometimes the money is spent before the check is even in the mail, and many are left wondering where all the money went. This year, considering the current economic situation, there are better ways to spend that 2008 tax return.
Save
This probably sounds like the most boring way to spend your tax refund, but it is the safest. If you’re not one that saves regularly, this may be an opportunity for you to save more money and have a little extra breathing room in case an emergency comes up. Or, it could go toward saving for a home or college money for your children (check out 529 plans for saving for college).
Retirement
Many companies are cutting back and you may be a little worried about your 401k right now, so check out some other retirement options such as an IRA. There are several different types of IRAs, and opening one could be a tax break for next year’s income taxes.
Clear up some Bills
If you’re hanging on to a high credit card balance that doesn’t seem like it’s diminishing, use some of your refund to pay part of it off. Or if you are past due on some bills, try to pay off as many of them as you can with your refund. Paying down a few debts will reduce some of your financial stress…and you can’t put a price on that.
Contribute to a Charity
You may not be so willing to give up your refund without getting anything in return, but if you’re in a financial situation where you can give up a little extra cash, this is a great way to go about it. There are a lot of causes and charities out there that can greatly benefit from your contribution. Plus, donations to charities would also be a deduction for next year’s taxes.
Invest in Yourself
If you have been wanting to go back to college for any type of degree, this money could go toward making that happen. Or, if you just want to get involved in some arts classes, use this money to invest in growing as a person and expanding your interests and knowledge.
Splurge…a little
Don’t use your entire refund to splurge, but you have worked hard for that money and deserve a little treat. After you’ve paid off some debt or invested some of it, reserve a little to celebrate another year of surviving tax season.
So, when that refund check finally makes it to your Cincinnati apartment, don’t overdo it. Look at your finances and your life and see where it would be best to put that money. A cruise or a giant TV is awesome, but will it improve your current financial situation and help you sleep a little easier?