It’s so thrilling to see the assessment of how much of your hard earned money you’re going to get back from the government on your Tax Return. The question is what to do with the money?
Well, I know what I want to do (a big shopping spree for house renovations, new computer, vacation, plus some other items on the wish list), but then I know that’s not really what I should do.
Here’s a list of suggestions (you can do one/some/all):
- pay down/pay off Credit Card debt
- pay down/pay off student loan
- pay down/pay off vehicle loan
- pay down/pay off mortgage
- increase emergency savings (buffer for a rainy day when you have a loss of job and still need to pay bills/vehicle breaks down unexpectedly needing a major repair)
- increase your retirement savings plan to make retirement more comfortable
- increase education fund for your children to give them a better future
- purchase things necessary to prepare for unprosperous times/other times of need for relief (eg. a food storage
You don’t have to put 100% of your return onto the different forms of debt/savings you have. The ideal way is to put the majority of the money onto the debt where it would have the most effect (the highest interest rate to minimize how much you will end up paying in the long run – see previous blog entries “Should I Invest My Money Or Pay Down My Debts?“, “Loan Consolidation and Debt Elimination“). Hold back a small portion of your return for your highly desired shopping spree/life upgrades.
As a result of following this pattern, you will have a greater sense of relief, lower stress level (because of less debt to pay off) and you have reason to reward yourself for paying down more debt.