It is that time of year again – Income Tax Time

Many people look forward to getting a huge chunk of money in February or March. But by June some people have no idea where all that money went.

What will you be doing with your income tax refund this year? Do you have a plan? It is recommended to have a written plan prior to getting your refund. Make a commitment to use your money wisely. Here are some ideas for a large income tax refund.

Debt:

Pay off or pay down credit card debt. Start with your cards with the highest interest rate. You will save money by not paying that high interest each month.

Private student loans usually have a higher interest rate. Income tax time is a great opportunity to pay some off. Even if you can’t pay off your loans, you can still make extra payments to help get rid of your loans earlier.

Pay off all or at least some of your outstanding car loan debt. Make sure the payment goes towards the principal though.

Savings:

Use this opportunity to build up an emergency savings balance.

Contribute to an IRA. Start early. Your money will grow and you won’t have to worry so much later on when you retire.

Fun/ Family/ Every day expenses:

Set up a fun money account. Everyone needs a little “fun”. So why not put some of this money in a savings account. Throughout the year you can use it to take your family on a vacation or use it for day trips. It will also keep you from using credit that you may not be able to pay back quickly.

Enroll your children in after school or weekend activities. Sign them up for martial arts, swimming, or dance. This not only gives your children a great experience, but it also gives you some free time.

Take care of your car. Taking care of your car will help it last longer – saving you money on possible future repairs.

Increase your pay:

Give yourself a raise by adjusting your tax withholding to increase your take-home pay. You may not get as big of a tax refund – but you will have the extra money during the year.

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