Refunds and Regrets

After filing taxes and finding out how much money will be refunded this year, many Americans feel like they’ve hit the lottery! The first instinct, in many cases, is to rush to a favorite retailer, shopping mall, or online boutique and splurge. After all, having diligently paid taxes all year long does entitle you to some type of reward now right!?

There are a plethora of indulgences that we can imagine spending these extra dollars on each year. However, many of those choices will lead to nothing more than remorse, regret, and in a few cases…repossession. Insanity is defined as repeatedly exhibiting the same behavior and expecting different results. This year, rather than letting that extra lump sum burn a hole in your pocket, consider just a few of the really smart and responsible things you can choose to do instead. Below are a few SMART ways to spend that refund check that do not include luxury handbags or overpriced jewelry. Don’t worry, we’ll get through this together.

  1. Pay off your credit card debt. With tax season closely following the holidays it is easy to fall into the habit of charging increasingly more and more on credit cards. Perhaps it's the prospect of a large tax refund soon to come. Perhaps it’s the cold weather that forces us to do more indoors contrary to the spring and summer when we could simply be taking walks in the sunshine for free. If you have extra cash coming in, now is the time to throw it at those lingering credit card bills and get ahead of yourself. There are few things in this world more satisfying than seeing that balance fall to $0.00.
  2. Stash Some Money In Your “Emergency Fund.” Everyone should have an emergency fund of money to fall back on in case things in life go awry (and they always do). Experts recommend building up a savings equal to at least six months’ worth of living expenses. Think back on the past year. Can you remember how many unexpected expenses you had pop up? Having an emergency stash of cash really helps me to stay on track without feeling you didn’t have control over your finances. Even if you can only portion out a small chunk of money into this fund, it’s truly better than nothing. Every little bit that you can put away ahead of time counts because you never know when you’ll be in need.
  3. Make A Large Payment Toward Your Our School Loans. If you have a couple of lingering student loans, your tax refund is a great opportunity to pay them down. Many alumni cross the threshold with more than just one student loan under their belt. If you are like most people, those loans can cause slight anxiety when you think about how long it will take to pay them all off. If one of these loans has a particularly high interest rate, tackle it first. In the future, whenever you have extra cash try and increase that month’s loan payment. This will helps you feel like you’re tackling something overwhelming and making it manageable.
  4. Invest In Your Living Space.Rather than frivolously spending your refund on clothes, makeup and lavish dinners out, invest in items for your home or apartment to ensure that your money is being spent on items that you will use for years to come. You spend a majority of your time in your home and it should be a place that you look forward to going home to and which also reflects your personal style. When you invest in your home, whether it be taking care of small repairs, painting or redecorating, it’s a purchase that you can physically walk past on a daily basis and think about the money that you spent wisely!
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