COLUMBUS- People are now getting their tax refund and trying to decide how to spend it. 10TV's Laura Borchers spoke to financial professional Shane Eighme to share ways to make your tax refund work for you.
Buy Your Financial Freedom
• Credit card debt in the U.S. has hit an all-time high, reaching over one trillion dollars!
• Any kind of debt can stand between you and your financial freedom, especially when you’re entering retirement. That’s why it’s important to pay off debt as quickly as possible.
• Your tax refund is a great way to cut down your debt, if not eliminate it.
• Use your refund to pay down high-interest debt like credit card debt or other outstanding loans.
Get Peace of Mind
• Almost a quarter of Americans have no emergency savings.
• A good rule of thumb is to have 3-6 months worth of expenses saved in a separate, easily accessible account for emergencies.
• If you already have an emergency fund, consider using your refund to make those car or home repairs that you may have been putting off.
• Also, remember if you use money out of that emergency fund, you need to replace it. That way you’re prepared for the next “rainy day.”
Upgrade Your Retirement
• Use the arrival of your refund as a reminder to evaluate your retirement.
• Take some time and look at what you have saved for retirement, or meet with your financial professional to adjust your plan.
• If you participate in an employer-sponsored 401(k), save more for retirement by increasing your contributions.
• Consider taking your refund and putting towards other retirement accounts, like a traditional IRA or a Roth IRA.
Invest in the Future
• Baby Boomers are the fastest growing segment of the population with student loan debt. For the most part, that’s because they are taking out loans for their children or grandchildren.
• Consider starting a 529 plan for your children or grandchildren.
• The opening amount can be as low as $25-$50 and anyone can contribute to it, even grandma and grandpa or your good friend!
• Starting this plan now will help you give the gift of college and help your loved ones avoid being part of the 44 million Americans with student debt.
• I have more information about 529 plans on my website.
Generate Good Karma
• Think about donating your refund to charity.
• Research charities and organizations that support causes that you are passionate about. Find out if they need monetary donations or supplies.
• It can be a fun family activity to pick out a cause you want to support or go shopping together for supplies to donate.
• This is a great opportunity to give to those in need and teach your children about giving back.
Treat Yourself
• Fun is in the word refund!
• Take part of your refund and spend it on an experience or something you’ve always wanted to do, like taking a weekend away to explore somewhere new.
• You can invest in yourself and learn a new skill. Sign up for a cooking class you want to take - it may even save you a few bucks if you use those skills to start cooking at home more.
• Or you could buy yourself some time, and hire someone to clean your house or mow your lawn.