Every year around this time, millions of people get a tax refund. Some people spend it before they get it, others have debts and use it to pay down some debt and others just spend it all on themselves.
Here are 6 things you can do with your tax refund this year.
1. Pay down/off your credit card debt. Pay the smallest balance first. Having debt and spending money on non-essential items is not wise. And yes buying a dress or a cute pair of shoes are non-essential items.
2. Make an extra payment on your mortgage. This is often called a pre-payment. You will need to find out from your bank if you can make an extra payment without penalties. An extra payment here and there on your mortgage can really help you pay down your mortgage really fast.
3. Save it! If you don't have an emergency fund with a minimum of 6 months worth of expenses, put it towards that. You could use a tax free savings account for your emergency fund? Contribute to your RRSP if you already have an emergency fund. For every dollar you save is one less dollar spent. Save it and watch it grow.
4. Pre-pay a bill for a year and free up your cash flow. Think about paying your car insurance for the year. If you normally pay $1500 per year, that would free up $125 per month that you could use for something else.
5. Invest in yourself! Are there a few courses you would like to take to upgrade your skills? Rather than go into debt, you could use your refund to pay for your courses. Some Universities and Colleges offer online certificate, diploma and degree programs that you can take in the evening or online.
6. If you have no debt and a pretty good nest egg, consider giving it away. You could give it to your local church, or donate it to one of your favorite causes.
If you're getting a tax refund this year, it simply means that you gave the government an interest free loan. I wrote about this in a previous blog, because for years I received a tax refund. Not any more!
What are you going to do with your tax refund.