While everyone can take advantage of a free efile at tax time, I realize that not everybody gets money back after filing taxes. And I do understand that getting money back is often a sign that you paid too much in, and that it would have been wiser to adjust your withholdings so that you kept that money instead of loaning it to the government to earn interest off of. I get that. However, if you are like us, you just might qualify for tax credits that carry with them a nice bonus refund. That’s always cool.
But, what to do with that extra money?
Well, obviously, if you’re in debt you NEED to pay that off, asap. Please do not blow you tax refund buying more junk. PAY OFF YOUR LOANS! Breaking the shackles of debt bondage must become the top priority in your financial life.
If your mortgage is your only debt, then paying it off should be at the top of your to-do. And putting a good chunk of your tax refund toward paying down your mortgage is actually, in my humble opinion, a very wise financial investment to make.
By paying extra on your loan, not only are you reducing the amount of years it will take to pay it off, you’re also saving that much more in interest. You can type your loan info into an amortization schedule calculator, and find out how much interest you will be saving by making an extra payment. Of course, your loan amount, the amount you want to put down, and the interest rate of the loan are all variables here.
In our situation, if we put an extra $2000 down on our mortgage (tax refund money), it will actually save us about $4000 in the long run. That’s like double our money back! If you ask me, that’s a pretty good investment, with low risk (no risk if you stay in the home) and great return!!
At a time when the market is unstable, it’s hard to know how to invest wisely. But for us… this is the answer. Pay off the mortgage!!
If you’re expecting (or already have) a nice little check from Uncle Sam, and are wondering what to do with it, please consider how much money you could save over the long run by putting some of that money toward your home loan. A few years down the road, you’ll be so glad you were looking ahead!!
Of course, there are SO many good ways to spend your tax refund. How do you plan on using your money to benefit your financial future?