5 Smart Ways To Spend Your Tax Refund
Each year, approximately 80 percent of Americans who file a tax return receive a refund, with the average refund being around $3,100. If you’re like most people, you’ve already spent that money in your head 10 times over before the funds ever hit your bank account, but it’s important to take some time to consider the wisest course of action for your money. Here are five smart ideas for that spring windfall.
1. Pay Off Your Debt
It’s not the most exciting way to spend your tax refund, but if you’re carrying high interest debt, paying it off (or at least making a big dent in it) will give you peace of mind and improve your cash flow for the rest of the year. If your refund is sufficient to pay off a single item, pay it off rather than spreading the payment across numerous creditors. Once you’ve paid off one thing, you can use the money you were sending to that creditor to pay down the next item. If you can’t pay off any one single item with your refund, either pay down the smallest debt so it’ll be easy to eradicate over the coming months, or sink it into the debt with the highest interest rate so you stop lining the pockets of your creditors with interest payments.