If you’re getting a tax refund this year, you’re probably at the high end of the tax season roller coaster of emotions. Before you’re tempted to blow it all in one place, here are seven ways to stretch your refund and feel good about it.
Treat yourself to something special
If you’re among the more than four million North Carolinians who have filed federal income taxes, you could be looking at an average refund of about $2,580. Take a quick inventory of your finances. If you don’t have to put the refund toward an immediate financial need, go ahead and spend some of it. Limit yourself to about 10 percent of the refund for something for yourself now. Take a class for fun, start that hobby you’ve been thinking about and maybe put the rest away for a vacation.
Plan for the unexpected
Did a car repair put a dent in your budget? If you were caught off guard with higher than normal home heating bills this winter and had to dip into your emergency fund, replenish it with your refund. No emergency fund? Now you have the funds to start one! It’s a good idea to put away three to six months of expenses in the event of job loss, illness or unexpected expenses.
Get to a zero balance on credit cards
Rid yourself of high interest credit card debt. Try to pay off at least one card. From there you can work toward small, repeatable victories.
If you already have an emergency fund, put the money in a Share Account. It’s an easy way to save for key family events such as marriage, children, or if you need to move a family member into the home.
Invest in the future
Use your tax refund to open or add to an LGFCU Individual Retirement Account (IRA) or contribute to a child’s education with a Coverdell Education Savings Account. What may look like a robin’s egg now, could be an ostrich egg in a few years.
Donate to charity
Consider donating some of your refund to a reputable charity. You’re not only contributing to the greater good, you may be able to claim a deduction as well. Contact your tax advisor for additional guidance.
Make an extra loan payment
Reduce your balance on a personal loan or mortgage. This way you can potentially reduce your monthly payments or at least shorten your repayment period. Plus, you could see a bump in your credit score because you’ll be carrying less debt.