Millions of people nationwide receive tax refunds each year. In a good economic time, tax refunds are spent on splurges, home improvements, vacations, or education. This year however, consumers are not
throwing caution to the wind and are more inclined to want to spend
wisely. DestinationVillas.com Editor, Tori Milan states that consumers should look at the
year ahead and plan accordingly. “A good rule of thumb would be to save
half and spend the balance on something you might not ordinarily be
able to do in a recession. Saving is a good financial habit that all
Americans need to cultivate.”
Wise ways to spend your tax refund:
Vacations:
One way to spend a tax refund is on a vacation that you may have had to
cancel due to tighter finances this year. Taking a vacation is
important to our overall well-being. Americans take fewer vacation days
than their European counterparts. Vacations are an important break from
daily stress at work, are important to overall good health and create lasting family memories. Instead
of canceling the vacation completely, look for ways to stretch your
vacation dollars. There are plenty of ways to make your money work for
you. “Vacation rentals are a great way to stretch the vacation
budget,” states Milan “Renting a larger house does not incrementally
change the rental rate. Consider renting a larger vacation home and
splitting the expenses with another couple, extended family or friends. Furthermore, vacation rentals are always more economical than hotels”
Home Improvement:
If you own your primary residence or a vacation home, home improvements
will increase its value long-term. Buy new furniture, landscape or
update a kitchen or bath. One upgrade, such as a new countertop, custom
landscaping or paver tiled driveway can add lasting value to your
investment as well as to daily enjoyment for the homeowner. New
furnishings, carpet or tile will make your rental property more
marketable.
Down Payment on a Vacation Home:
Start stashing away chunks of money anywhere you can to come up with a
down payment for the vacation home you have always dreamed of. Analysts predict that 2008
and 2009 will render the best purchase prices on real estate in over a decade. Having money in the bank puts you in a position to be able
to make a down payment in a down turned market, making vacation home
ownership possible. And remember that vacation rentals generate income
that will help meet the mortgage payments.
Pay Off Debt:
If you are in debt, use the refund to pay off credit cards or a car
loan. But remember that the best way to become wealthy is not to
rely on credit cards. With the debt out of the way, make a vow to set a
budget within your means and live by it. Take the 6o-day test – don’t
use any credit cards for two months. Participants report that at first
is seems daunting to live with out credit cards, but by the end of the 60-day challenge they enjoy the freedom of living debt free. The good
news is that if you can do it for 60-days, you can do it for a
lifetime. Use your bank debit card as a credit card, keeping track of
the account balances. Simple success steps to follow are:
• Track where your money is going and cut out unnecessary spending.
• Set aside one credit card, with a low intererst line of credit, for emergencies or purchases that are too large for a debit card.
• Pay off the credit balance within 30-days and try to make using it the exception rather than the rule.
• Learn how to stretch your dollars by buying in bulk, conserving energy and cutting back on frivolous purchases.
