If you just got a huge tax refund, no one would blame you if you felt just a little bit giddy. A big tax refund is one of the most satisfying things possible from a financial perspective. You can do a lot of good things with one as well. It is of vital importance that it be spent wisely, however, to produce the best results. Perhaps you’ve been looking forward to tax time because you’ve been wanting to make some large purchases. There’s nothing wrong with that. It is a satisfying feeling when you or your spouse have worked all or most of the previous year and now you’re getting a lump sum back from the government.
There are any number of ways one can improve your family situation when receiving a large return. First, it is important to have a checking account in order for the government to have a way to quickly give you the money. Waiting for it in the mail can take a long time, and also you don’t want a check that large to be floating around out there. Better to have a way they can deposit it in your account.
The following are some overlooked ways you can help yourself and your family when getting a return of, say, between $5,000 to $7,000 from the federal government.
Do Car Repairs
One of the best things you could do is the maintaining of your vehicle. Especially, for example, if the check engine light is on. Go down to Pep Boys or someplace like that and have them run a diagnostic on your engine. They will hook it up to a computer and most likely find some repairs you can get done right away that may cost anywhere from $300 to $1,200. But you can afford it now because you’ve just gotten a large tax return.
Renovate the House
Buying new furniture can be very satisfying. A new living room and bedroom set, complete with a new sectional and new bed and dresser, can give you a feeling like nothing else. It’s also rewarding to be able go give your kids that new bunkbed with the drawer built in and stairs you can climb up. Now they can have sleepovers. A new living room set will cost between $800 to $2,000. And if you really want to maximize the refund you can buy the living room set outright and then get the bedroom sets from a rent-to-own place like Aarons or Rent-a-Center. If you have a 3 bedroom it will just cost you about $300 for the first payment to renovate all the rooms of the house.
Pay Off the Car
If you have a car note that’s been burdening you for years, it might be good to consider paying it off. For a substantial chunk of change you can pay it off and then wait for the title to come in the mail. First, it just feels good to pay it off and relieve yourself of that considerable part of your income being drained from you every month. With that savings you can free yourself to do any number of things, such as save for retirement. Mostly, though, there is satisfaction from knowing you finally own a vehicle you’ve been paying for every month for years. With that title in your hands you can obtain an emergency loan if you ever need it.
Pay Next Month’s Rent or Mortgage
It is a fact of life that most middle-class Americans live from paycheck to paycheck. Therefore it is wise to pay next month’s rent in advance, especially if you get your return in the middle of the month. That frees up several paychecks to spend or save. It’s almost always better to save, however. You never know when there may be an emergency, and having at least $1,000 leftover after you’ve made your purchases and repairs can put you ahead of the game. These are just a few ways to use your tax return that you may find can change your life for the better.