8 More Smart Things to Do With Your Tax Refund
According to the IRS, the average tax refund for the 2012 filing season is $2,899. Although that amount is nearly $100 less than we received in 2011, it’s still nothing to shake a stick at.
Who couldn’t use $3,000, right? But in order for that fast cash to make a difference, you must use it wisely.
Before you get too excited and start burning through a check you don’t even have yet, consider these responsible ways — an extension of last year's post on 8 Smart Things to Do With Your Tax Refund — to help manage your personalized stimulus package. (See also: What If I Skip My Taxes This Year?)
1. Green Home Improvements
We're always fixing little things around the house — a squeaky door, a leaky faucet, that light bulb that always burns out — but not many of us think of the bigger picture when it comes to home improvements. When you receive your refund this year, concentrate on the long-term sustainability of your home instead of the quick fixes. Upgrading to energy-efficient appliances, installing solar panels, and building a garden are all great ways to add value to your property while preparing it for the future. The money you'll start saving on heating, cooling, and grocery bills won't hurt either. Don’t forget to stretch your dollar even more by DIYing the improvements (you do not need to hire someone to plant tomatoes in your back yard!) and searching for the best prices possible on eco-friendly supplies.
2. School Loans
On one of the last days of class at the end of my senior year in college, I remember one of my professors asking us to reflect on the time and money we spent on our education. He asked us if we would have done it all over again given the circumstances. Emphatically, I said yes! That is, until I got the bill. I’m being facetious, of course — I wouldn’t trade my college experience for anything — but I wouldn't be opposed to a generous benefactor (anyone out there?) paying off my loans; despite the financial aid I received, the cost was still unbelievable. Alas, until the day comes when a rich person who’s put me in their will kicks it, I have to send out a check every month to avoid financial ruin. Thus, I take every chance I get to send the bank extra money in order to pay off my debt off sooner — and so should you.
3. Big-Ticket Buys
One of the great parts of a windfall payday like a tax refund is that you can finally afford big-ticket items. That doesn’t mean you should book yourself an all-expenses paid vacation, however. Use this opportunity to pick up an expensive item that you need around the house, like a new vacuum cleaner, washer and dryer, or computer. There's nothing wrong with dropping decent coin on something that will somehow make your life a little easier. If you're a small business owner buying items you'll use for work, keep the receipt. Next year that purchase will qualify as a deduction, so you definitely don't want to miss out on that.
4. Credit Card Debt
We all know that credit cards are a no-no, but sometimes they’re a necessary evil when we’re in a bind. If you’ve racked up the charges on your plastic this past year, by all means try to eliminate that debt. By consistently brushing off what you owe, you’re incurring late fees that are driving up the amount you’re required to pay back while also hurting your credit score, which can affect your ability to buy a home, car, or anything else for which you’ll need a loan. Just pay it off and be done with it — if only so your phone will stop ringing.
5. Doomsday Preparations
I know some of you are going to laugh at this, brush it off, and call me a kook — but you'll be sorry when the zombie apocalypse begins and you're not prepared. That's a bit tongue-in-cheek, of course, but really, how prepared are you for disasters? The walking dead aside, crisis can strike at any moment, whether it be from Mother Nature or man made, and it's not a bad idea to at least pick up the essential survival tools that one needs to make it through a week or so inside the home (or, worse, on foot) without running water, the ability to find fresh foods, or access to technology. My go-to survival-tool source is Ready America. Its prepacked bags contain everything you'll need to stay alive at an affordable price. You can thank me for the tip when we get to the zombie refugee camp.
6. Life’s Necessities
Like with those school loans, it’s always beneficial when you can send in extra cash on whatever outstanding debts you have (such as a car loan or mortgage). But car payments and mortgages notwithstanding, there are plenty more of life's necessities that need TLC — tender, loving cash. If you're on the hunt for a new job, don't be afraid to splurge on an interview outfit that makes you look like you mean business; the Shop It to Me blog recently published helpful advice from frugal fashionistas that will have you looking your best without going broke. For those of you with kids, well, they always need money for something; there's no time like the present to stash a bit away for a rainy day.
7. Cell Phone Upgrade
This may seem like a frivolous purchase — and in some regards it is — but a cell phone upgrade isn’t all for pleasure. Because of my iPhone, I’m able to get infinitely more work done while I’m on the go than I would if I had one of the ancient models I used to have (remember the Motorola Razr? So primitive in hindsight). I can check and respond to e-mails, start writing new posts in the Notes, and plan my meetings, all which give me more time to concentrate when I’m back in the office. Plus, smartphones have an excellent resale value. Since I switched to an iPhone upon its launch, I have always sold the previous model for the price I pay for the latest version when I upgrade. Zero money out of pocket is my favorite kind of buy.
8. Put It Into Savings
Trust me, I know that saving your tax refund and letting it sit in an invisible vault isn’t as satisfying as handing over dead presidents to a bartender in a tropical locale, but your self-control will pay off in the long run. To make yourself feel better about your very-adult-but-no-fun-at-all decision, assign the money you're putting in the savings account toward something tangible. Maybe it's a new car, a down payment on a home, or another large purchase that will improve your life. When you have a goal to reach and a reason to send that money someplace you can't see it, you feel better in the short term about how being responsible totally sucks sometimes.
Tell me — what do you plan to do with your tax refund? Make it good, and let me know in the comments below.