Everyone should have received or should soon receive your tax return. Today we discuss the best way to make that money work for you.
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Start or increase your emergency fund. We’re going to do an entire show on this subject but if you don’t have one to two months expenses in an emergency fund, use your return to start one.
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Pay off your high interest credit card debt. If you’ve been with us for even a few episodes, you do not need to be told this. If you have one dollar of credit card debt, pay it off or at least pay it down.
You need to spend that money on something other than Pogs and fax machines.Tweet This
Spend it on something you need. Be honest with yourself though. A want and a need are not the same thing. If you don’t know that, it’s why you’re in debt.
Start an itemized savings account. Segment your savings account into separate categories, “vacation,” “clothing” etc. But it’s all one account so you don’t have to keep track of multiples.
Refinance your mortgage or make home improvements. You’ll need to run the numbers before deciding if re-fi makes sense. You might save money on your monthly payments but is it more than the up front costs of refinancing? Would it be worthwhile to upgrade your current home with an eye towards selling if you have enough equity or buying another home to live in while renting the current one out?
Invest in a tax sheltered account with help from some free tax tools online. Begin a Roth IRA or a 529 account if you have children which is a tax-free savings plan to help pay for college.
Donate to charity. We all have something we care about, animal welfare, childhood literacy, the service that a site like Wikipedia or Wikileaks provide. Your donation may not meet the threshold for tax deductible status but donating is one of the few ways spending money can provide a lasting sense of happiness.
Do you give any money to charity or are you a real big dick?Tweet This
Get your home business up and running. It takes money to make money and now you have some extra money.
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Spend it on something you want. Within reason. I know you want an 80 inch whatever TV but as we’ve all learned together, buying stuff does not bring happiness. So the money is better spent on an experience, a nice dinner, a weekend trip, or giving to charity. Unless you’re a real big dick.
What the hell is a spring jacket? It’s either a jacket or it’s not a jacket.Tweet This
SavingForCollege.com: An explanation of the 529 college savings plan.
Mint.com: an on-line money managing tool.