By now, most of us have gotten our income tax refunds. But if yours isn't a distant memory yet, here's some useful advice on how to spend it.
There have been changes in the tax laws over the last few years, many resulting in higher refunds for many Americans. How much higher? According to the IRS, refunds this year are averaging close to $2,800… that’s a 9% increase over last year.
If you haven’t already blown your refund at the mall, maybe you should consider some ideas that could help you leverage it into more money.
Idea number one: Use your windfall to reduce debt. If you’re paying 15% interest on a credit card, that’s like earning 15% tax free on your tax refund.
Or, open an IRA. Invest $2,000, earn 10% a year for 20 years, and $2,000 will grow to $13,000.
Ever want to try investing in stocks? Maybe now’s the time.. The market’s low right now, and there are mutual funds that will let you get started with even a few hundred bucks.
How about a college fund? Look into starting a 529 savings plan.
But if you can’t stand the thought of not spending your money, at least make yourself more productive. If you haven’t already, maybe now’s the time to buy a computer. Or, if you already have one, how about some personal finance software?
And if all that advice is just too darn practical, at least make a memory. A mini-vacation, a night on the town… anything is better than just frittering that refund away.