Lone Star National Bank
5 Ways to Put Your Income Tax Return to Good Use
Apr 06, 2017
It’s that time of year when everyone is looking to get ready to use their income tax return. The average income tax return total is about $3,120 according to the IRS. Before spending your return on something you might later regret, consider better ways of putting it to good use. Below are some options to consider.
Pay an Old Bill a Visit
A tax refund for many is almost a financial helpline where they can get caught up on past due or old bills that just won’t go away. This can be anything from a mortgage payment, car notes, student loans or past-due utilities. Not only can getting caught up on bills save you the hassle of racking up interest and penalties, it can also save you from repossessions or nose-diving credit scores. We know it’s easy to get caught up in ideal purchases like that TV you’ve been wanting or those expensive shoes, but paying off past-due bills will save you much more in the long run. Give it a thought. You’ll be leading a financially stress-free life if you do.
Save it for a Rainy Day
This is probably one of the most popular and effective options. Putting your income tax away for emergencies is a great way to ensure that you won’t have a panic attack should you lose your job or suffer an expensive medical emergency. The rule of thumb is having at least three to six months’ worth of bill coverage and expenses in an emergency fund. Consider putting the stash of money away in a savings account with interest-bearing perks or a money market account where you can earn a higher interest rate. These options are great and easily accessible for emergencies.
Pay Off High Interest Debt
It’s alarming that the average household debt in America is around $15,000 with an APR of 15%. Putting your income tax return towards a similar debt could help you save thousands over an extended period of time. It doesn’t matter if your debt is sky high, paying off a good amount every tax season can save you up to three times as much as paying off the minimum every year.
Open a Certificate of Deposit (CD)
If saving is very importance to you, a certificate of deposit (CD) should be something to consider. A CD is a great and sensible way of earning interest while saving money. One of the main advantages of a CD is security. The FDIC insures deposits to the maximum amount allowed by the law.
The second advantage is that they are often offered with fixed rates and terms. This makes it easier to plan for the future while getting a glimpse of what it will grow into. A CD earns interest at a higher rate than savings accounts and can be a great alternative. Contact our investment services on how to get started with CDs, bonds, 401(k)s and other investments!
Go on a Much-Needed Vacation
AIf all of your savings and emergency funds have been taken care of, then consider splurging on your family. There’s no better way to energize and rejuvenate than with a much-needed vacation. Instead of heading straight to your local mall to spend recklessly, consider planning a trip somewhere. Experiences and memories can bring you much more happiness than material things, so go ahead and plan away!
Smart Financial Services
There are many ways to travel down the savings goal path and income tax money can certainly help you get there faster. As we mentioned above, before heading out to your favorite clothing store this tax season, start thinking about your future. Lone Star National Bank offers great saving solutions for all of your financial needs. Get in touch with our bank in McAllen today to get started!