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Tax season, for us, is usually one big moment when we pull together every piece of paper, e-receipt, expense sheet (read: anything with numbers scribbled on it) and wonder what in the world we did before Turbo Tax. Whether you prepared your taxes yourself (whoo hoo!), pawned that duty off on an accountant (equally smart, by the way), or convinced your father to take one for the team, here’s something we can all agree on: that return is a gift. Amen? Amen.
In years past, both Brit and I have blown our refunds on ridiculous things, but now, we’re older, wiser, and have experienced the perils of being broke phi broke. But, let’s be honest: We’re just like you. We want to live our best lives. Not classified by material items, but lives filled with amazing travel opportunities, fleeky 401Ks, paid off credit cards, more financial freedom, and gasp a savings account we can hang our sneakers on.
While there are no super easy answers as to how to make your money grow, with just a little bit of knowledge, planning, and intention, you can make your tax return work for you and your future. So, in an effort to help you (and help ourselves) be accountable for making better adulting decisions, here are 5 ways we’re planning on beasting our tax return.
Paying Down Debt
More often than not, we buy things to make us feel wealthy. Whether it be that new flat screen TV, a car we can't REALLY afford, or a pair of kicks that cost too damn much and will be worn about 1.5 times. Here's the thing, though: while we FEEL weaalthy, actual wealthy people aren't doing any of that - they're too busy actually being rich. According to financial adviser and SoFi’s president of wealth, John Foley, the first step on your road to financial freedom is to pay down existing debt, particularly if you have credit card debt.
Among households that carry a balance, the average balance is over $16,000—a lot of money, especially when the average interest rate is generally over 16%. One of the first things to do [with a tax return] is pay down any debt that you have.
No credit card debt, but got student loans? That’s another great place to put your tax refund. Agaim according to John, "If you have a $30,000 student loan, pay down the loan. Be careful, because some student loan processors will not put the money towards reducing your debt, they’ll just put it towards future payments. If you put it towards the principle, that means that going forward, you’re paying interest on a smaller amount of money, which will save you a lot of money.”
Appreciate Your Assets
There’s no place like home, and given the current climate, it might be in your best interest to make the transition from renting to buying. Basically, no vacations with your tax refund. This could be a great way to add to your cash reserves for a down payment, save up for closing costs, or just stash some extra cash away for household emergencies.
Do you already own? If so, focus on spending your tax return on projects where you'll add some equity to your home and, in turn, increase it's value. According to the most recent report, making your home energy efficient goes a long way. Fiberglass insulation, replacing vinyl siding with manufactured stone veneer, solar panels and more will go a long way towards making your home more green AND making your home more $$GREEN$$. Feel us?
SAVE, SAVE, SAVE
This is something I'm proud to say that I've stuck with and, it finally feels like I'm actually on track to not eat ramen noodles ever again.
That said, saving is important. Whether you'r saving up for a rainy day or for that wedding you'be been planning, it's important to sacrifice immediate gratification (read: shopping for that new sneaker release) for long term goals.
Opening up a high-yield saving account (like this one) will give you a higher interest rate while also ensuring that you won't see the money you insert until you physically log in. I don't know about you, but out of sight out of mind has really been working for me.
Looking for more ways to beast your tax return, click the link below to see two more ways we're investing in ourselves this tax season.
What are some ways you used your refund (or are planning to use your refund) to better yourself? Let us know in the comments below!
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