Cashing In on Your Tax Refund: 5 Ways to Make the Most of Your Tax Rebate
Receiving a payback from the IRS with regard to your taxes is one of those pleasant surprises many look forward to at the end of the financial year. Best Mom Ideas offers some tips on how to put these extra funds to good use that you'll hopefully reap the rewards of for years to come.
1.Saving for child's education
It may seem like a long way away, but many empty nesters can attest to the fact that children grow up in the blink of an eye. So, if you are dreaming about the day when your child becomes a doctor, lawyer, or interior designer, for example, and feel like you still have plenty of time to plan for it, it's better to put away money now rather than later before the day creeps up on you, and you're left wondering where the time went. Instead, you could plan now for the future and invest in a 529 plan and enjoy even more tax advantages by investing wisely.
2. Pay outstanding debt quicker
Of course, if the balance on your credit card is racking up the bills in interest charges, you could put your tax rebate money towards reducing your outstanding balance quicker, which will also help reduce your interest repayments.
3. Home renovations
Suppose your home could do with a bit of sprucing up, but you just haven't had the additional funds to put towards renovating and redecorating your home. Then using your tax rebate to fund some of these projects is sure to take you a long way. Furthermore, you'll probably be really pleased in the end, knowing that your money went towards something that you make use of for a long time.
4. Put it towards business expenses
Another way to put your tax rebate to good use is to put it towards your start-up capital in the early stages of your business if funds are short in this area. But you'll want to plan correctly for this to ensure you are allocating funds correctly to where it is needed most. Hence, why you need a thorough business plan that not only provides a blueprint for key areas of your business such as how your business will be structured and how you'll market your offering, but also details what your financial projections are, and how you'll obtain any additional funding you'll need day-to-day expenses if you don't have a significant amount of start-up capital to tide you over.
5. Putting it towards a down payment for your new home
If you are thinking of buying a new home, you'll most likely need to put money down as a down payment. Depending on how much money you're able to put up-front, this can affect the rate at which you'll be able to pay off your mortgage. A large lump-sum payment can reduce your mortgage repayments significantly.
However, the down payment amount will differ depending on the type of loan you select. Generally speaking, if you can put down close to twenty percent of the sale price of your home, then you probably won’t have to pay for Private Mortgage Insurance, which can also save you extra money over time. However, if you have the privilege of having a Federal Direct Loan, you might not even have to put down a down payment, or you might just be required to put down around three percent of the value of the property if that.
In summary, it's always nice to receive an unexpected cash windfall, especially in today's tough economic times. However, it can feel even sweeter when you know you are making your money work for you by spending and investing it wisely.
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Guest Author: Christopher Haymon
