Tax Refund Dos and Don’ts

If there is a bright side to the insufficient pay that most of us get for our hard work, it is that we at least get a tax refund once a year.  The working people of the United States spend every day subsidizing the lifestyles of the rich who have access to expense accounts and shell corporations, and on one day every year, a check arrives in the mail, or a deposit arrives in our bank accounts, as acknowledgement for our hard work.  Unfortunately, tax refunds are not enough to reduce wealth inequality in any meaningful way.  This does not mean that you should spend your tax refund carelessly just to let off steam, as tempting as this prospect might seem.  Sometimes, the less you do with your tax refund when you receive it, the better.  Your modest tax refund really can increase your net worth, but how strategically you use it counts as much as the dollar value of your tax refund.  For help getting the biggest possible debt relief or credit score boost with your limited resources, contact a Plantation debt lawyer.

Don’t Use Your Tax Refund for a Big Purchase Unless It Generates Income           

If retailers had their way, everyone would use their tax refunds for big ticket purchases like furniture, cars, electronics, and travel.  It is almost always a terrible idea to spend your tax refund on a splurge, no matter how much you have been looking forward to it.  If your old car still works, don’t buy a new one; buying a second car with your tax refund means that your family will now need to make payments on two car loans.  If your car is getting to the age where the cost of repairs is adding up, though, trade it in and add the tax refund to the down payment amount, so your car loan balance will be lower.

Don’t Waste Your Tax Refund on Risky Investment Schemes

Your intentions to invest your tax refund are well placed, but don’t use it for risky investment schemes where you may or may not get any return on it.  It is better just to open a savings account if you don’t already have one, or to deposit your tax refund in savings if you do.  The interest rate may be low, but at least you know you will not get a negative return on your investment.

Do Be Strategic About Getting the Maximum Debt Relief From Your Tax Refund

Using your tax refund to pay down debt is a good idea, but you should think carefully about which debt to apply it to.  Use the avalanche method and pay it toward the debt with the highest interest rate.  Even if your refund is only enough to pay down part of the principal, you will save money on interest over time.

Work With a Debt Lawyer About Paying Down Debts

A South Florida debt lawyer can help you get as much debt relief as possible from your tax refund.  Contact Nowack & Olson, PLLC in Plantation, Florida to discuss your case.

Source:

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