Getting Money From the IRS? Here’s what you could do with it.
While most of us aren’t eager to file our taxes, there is often a silver lining: the majority of tax filers who file a tax return get a refund. The IRS reports that the average reimbursement so far this year is $ 2,880 – not a small amount of money. If you’ve got the cash on your way, here are some smart tips to do with it.
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1. Build or replenish emergency economies
Many people tapped into their savings accounts to meet their bills during the pandemic. If you are one of them, you can replace funds by putting your tax refund in a savings account or emergency fund. If you don’t have cash on hand for a rainy day (or not enough), consider saving your refund first.
2. Pay off credit card debt
Just as many people have turned to their savings to cover their expenses during the pandemic, many have taken on credit card debt. If you have a balance, you may want to use your tax refund to reduce it as much as possible. This could not only save you a lot of money on interest, but also improve your credit score if there is room for improvement.
3. Repay a personal loan
Some people took out personal loans during the pandemic to make up for the shortfall. Although personal loans don’t charge as much interest as credit cards, they still charge some interest. If you use your repayment to reduce your loan balance, you save money by paying off that debt.
4. Fix your house
Many people are still working from home or curling up because of the pandemic. If you have more spare time, this might be a good time to do some home repairs. If a lack of money has kept you from tackling home projects, your tax refund could make them possible.
5. Get a new car
You might be working from home right now and having your groceries delivered – but what happens when life gets back to normal? If you need a better car, consider using your tax refund to put down a down payment on one.
6. Go back to school
Although the unemployment rate in the United States is quite high right now, as the pandemic improves, more jobs could become available. If you want to change careers or aim for a promotion, you may need to improve your skills by taking courses or earning a higher degree. Your tax refund could help cover tuition fees.
7. Invest in your mental health
It has been a difficult year for a lot of people. If you’re doing well with savings, aren’t reducing debt, and have enough money to cover your expenses, consider spending some of your tax refund to relieve stress. Treat yourself to an online yoga class. Start seeing a counselor if you feel you need to speak to a professional. Or use that money to do things that will bring you joy, whether it’s doing something special for the family that you haven’t seen in a long time, or paying for extra child care to do something special for the family. pause.
While not everyone who gets a tax refund gets a huge sum, you can be online for several thousand dollars if your refund is around the average. Before spending that money, think about how it could improve your overall financial situation and use it accordingly.