Pay Down Existing DebtWith the average credit card interest rate hovering in the 15-18% range, using your tax refund to pay down any balances you have on credit cards will save you big money in the long run. Don’t have credit card debt? Consider paying down your auto loans or any other loans you may have. Be sure to check if your loan has an early payment penalty before you pay it off!
Build Your Emergency FundYou should ideally have three to six months of income stashed away as your emergency fund. However, even if you don’t have close to that much, having some money stashed away is better than having none when an emergency arises. Consider placing at least part of your refund in a savings account, just in case you need it down the road.
Fund Your Individual Retirement AccountEven if your employer offers a 401(k) or other retirement savings option, consider opening an Individual Retirement Account (IRA) and placing some money toward your retirement. The money you save now will multiply many times over before you need it in retirement. Solidarity can help you open your IRA too! Did we mention you can also take it as a tax deduction next year? Make sure to check with your tax advisor.
InvestIf you have paid off your debts and built your emergency fund and IRA, consider investing your tax refund. There are lots of options for investing, whether through a brokerage account or online. Do some research and pick the option that best suits your needs and objectives.
Consider Buying Flood Insurance or Increasing Your Liability CoverageWith less than $1,000, you can purchase flood insurance from the National Flood Insurance Program if you live in a low to medium risk area. For under $500, you can buy an umbrella liability policy with $1 million in coverage beyond the limits of your car or homeowner's insurance. Sometimes good money management means addressing the painful "what if" questions.
Start a Savings Account for Something BIG!Want to buy a house? Go on a dream vacation? Buy a new car? Start a new savings account for just that purpose that is separate from your regular savings account. It will make it much easier to save and not dip into it for splurges along the way. Check out our Savings accounts at Solidarity.
Invest in Improvements to Your HomeIncreasing the value of your largest asset is always a smart move. Consider repainting some rooms in your home, replacing that leaky faucet, adding a programmable thermostat, replacing your water heater or windows to make your home more energy efficient, or just cleaning out and sprucing up your garage. The money you invest will not only increase your home’s value, but will also make it a much more enjoyable place to live!
Donate to CharityConsider using part or all of your refund to donate to the charitable organization(s) of your choice. Not only will you help a very worthy cause, you’ll also be able to write your donation off as a tax deduction next year! Check with your tax advisor for clarification.
Replace an Inefficient ApplianceIf you're still using an old refrigerator or washer-dryer combo that's energy inefficient, consider donating your old appliances to a charitable organization and buying a replacement that's more energy efficient. You'll enjoy a new appliance, and your utility bills could be lower as a result.
Invest in YourselfHave you always wanted to take a college course? Would additional training in a certain skill make you a more marketable employee? Consider using your tax refund to invest in yourself by enrolling in courses that interest you. In the case of enrolling in courses that help you professionally, you may be able to turn that investment into greater earnings.
No matter how you are working to reach your financial goals, Solidarity is here to help! Stop by and let one of our employees help you choose the best services for your needs.