If you're lucky enough to get a tax refund this year, think twice before spending it on something frivolous. This year, treat yourself by using your refund on something that will benefit you for years to come.
Pay off High-Interest Debt
The average US household has over $15,000 in credit card debt. Since most credit cards have high interest rates, it can take years or decades to pay off such a large amount. If you only make the minimum monthly payment, you may stay in debt forever.
Using your tax refund to pay off high-interest debt will help you spend less money on interest payments. That way, you can get your debt under control faster.
Make Eco-friendly Home Improvements
You know the saying: your home is your biggest investment. This year, use your tax refund to make that investment more valuable.
Your refund could pay for an energy audit that helps you determine where your home is least efficient. You may want to upgrade old appliances with newer ones that have been certified by ENERGY STAR. Installing new windows, doors, or insulation could also make your home more efficient. You may even want to use your refund as a down payment on solar panels.
Making your house more eco-friendly could save you hundreds of dollars a year. Solar panels and other upgrades can also add thousands of dollars to your home's value. That means you can save money while you live there and make more money when you decide to sell.
Start a Small Business
Starting a small business can boost your annual income and give you the opportunity to explore your interests. Practically all businesses, however, require some startup capital. Depending on what you want to do, your tax refund could pay most of those expenses.
- Some great small business ideas for 2015 include:
- Building smartphone apps
- Teaching people how to use software
- Opening a food truck
- Buying vending machines
You can also turn your hobby into a small business that earns you extra money. If you already spend a lot of time on your hobby, you could make extra money doing something you love. It might not replace your job, but it's a fun way to invest in yourself.
Upgrade to a Better Smartphone
Mobile phone technology has evolved quickly. If your device is a few years old, you probably need to upgrade to something faster and sleeker. You could even help yourself save money when you upgrade to a more powerful smartphone like the iPhone 6 on a reliable network.
A new mobile phone can replace many devices. With the right apps, you can use your smartphone as a:
- GPS device
- Digital camera
- MP3 player
You don't need to spend hundreds of dollars on these devices when you have an up-to-date phone with a fast processor.
You can also use your smartphone to track your spending, get the most out of exercise, and play video games on the go. When you consider how many devices you can replace with a smartphone, an upgrade starts to look very affordable.
Take a Professional Development Class
If you want to earn more money at work, you'll need to develop skills that make you essential to your employer. You can find some free professional development classes online, but you may not get a certificate that shows you learned new skills. If you want a certificate from a popular school, you'll probably need to spend a couple hundred dollars.
Many universities and community colleges offer affordable professional development courses, too. Contact your local college to learn more about classes that will qualify you for a promotion.
Increase Your Charitable Donations
You can lower your overall tax burden by contributing money to qualifying charities and non-profits. The actual amount that you can save depends on several factors, such as how much you earn and what type of organization you contribute to. Chances are, though, that you are not even close to maxing out your charitable contribution deductions.
Talk to your tax preparer to see how much you can save by investing your refund in a non-profit you want to support.
How do you plan to spend your refund this year? Do you think you'll spend it on one of these recommendations, or do you have something else in mind?
Image via Flickr by jonsowman
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