Lifestyle

What to do with your tax refund

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Understanding your Personal Financial Situation

Understanding your Personal Financial Situation

Tax season is coming to an end, and refunds couldn’t come any faster.  If you have already received or will be receiving your refund, here are some smart ways to make sure you get the most out of it:

1.) Pay off Debt
High-interest debt seems to never decrease, and that is because giving minimum to moderate payments  is not enough to offset the accumulated interest. Instead, use your refund to significantly bring down your debt accumulated from title loans, debt consolidation loans, student loans, car loans and the dreaded credit card debts.  You can do this by starting a debt-elimination program.

2.) Emergency Fund
If you haven’t already done so, you need to have an emergency fund. An emergency fund is money that is available in case an unforeseen event happens in your life – you car breaking down,  somebody in your family passing away, an accident or an illness. Financial experts will tell you that an emergency fund has to be  about eight months worth of savings,  which can take a very long time to accumulate.  Using your refund for an emergency fund, is a very smart thing to do.

3. ) Refinance!
Take advantage of the lowest mortgage rates since 2004. If you refinance, the result will be paying thousands of dollars less than you are paying now on mortgage interest. Use your refund to pay closing costs.

4.) Take that Trip You Keep Dreaming About 
Month after month and year after year you put your own enjoyment on hold because you give  priority to other financial responsibilities you may have.  If you don’t set some money aside for enjoyment, chances are you will never take that trip of your dreams. Remember, life is short!

The refund will be gone before you know it, but here is something to look forward to: endless resources to help you reach your financial goals.  Here are two tips on how to reach your financial goals:  start an itemized savings account (where you put money towards reaching your long term goal) and start using Mint.com, a service that helps  you see the big picture of your finances:  set budgets,  set goals, and  receive notifications of payments due.  Do you have any other financial management resources that work for you?

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