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Tax Refund Purchases

April 18th

If you are one of the lucky ones expecting a tax refund check this year, you have probably have begun thinking about how you are going to spend it. Although saving the money is the recommended use of the check, it isn’t very common. However, there are a few smart purchases you can make with the check to put that money to work for you.

Mental Accounting

The problem with getting a tax refund check is that most people view it as “free money” or money they wouldn’t otherwise have had. This is false. Your tax refund is already your money, you just allowed the government to borrow it in a sense. Keeping this in mind, it is also important that you do some mental accounting of that money before it reaches your mailbox.

Now that you know what you can expect to get in the way of a tax refund check, spend it wisely. This means find a spot to spend your  money that will give back and be financially savvy. For example, if you have unpaid taxes from years past or any other type of debt burden, use your tax refund to pay these debts. The average person receives anywhere between $1000 and $1500 in a tax refund check, which can put a huge dent in one’s debt balances.

If your debts are in order and have manageable balances, consider using your tax refund check to pay an extra mortgage payment. Get one step closer to paying off your home by making an additional payment towards the principal on your mortgage. If you prefer, you can do the same with your car loan and get closer to having the title of the car be 100 percent yours.

 

 

 
 
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