You can probably think of a million things to do with your tax refund. These might include the obvious, such as paying down debt, putting cash into savings or making home improvements. However, these are not the only things to do with free money from the government. Here are seven commonly overlooked things to do with your tax refund this year.
1. Pay Daycare Expenses
Are you looking for practical things to do with your tax refund? Well, if you have children and you pay daycare each week, deposit your refund into a special account, and then use this money to cover your daycare expenses throughout the year. This can ease the burden of paying a childcare provider every week.
2. Emergency Preparation
The Red Cross recommends that each family have a “disaster ready” kit. This is especially important if you live in an area with hurricanes, tornadoes, earthquakes, tsunamis and other natural disasters. This kit should include enough non-perishable food and water for at least three days, a first aid kit, a radio, flashlights and any other useful item. Additionally, some of your tax refund can go towards purchasing a generator for your home.
3. Give Back
If you already have everything you need, give some or all of your tax refund to charity. This is a generous move, especially if you haven't donated anything throughout the year. Likewise, if you know a relative or friend who needs financial help, lend a helping hand.
4. Pay Cash for a Car
If you need a car, but don't want a car payment, take your tax refund and pay cash for an inexpensive vehicle. It might not be the prettiest car on the block, but if the engine works and the car is in good condition, it'll get you from point A to point B — minus a car payment.
5. Make an Extra Mortgage Payment Each Year
To reduce your mortgage term by seven or eight years, make one extra principal payment each year. If you use your tax refund to make this extra payment every year, you're one step closer to paying off your mortgage debt sooner. The quicker you eliminate your mortgage, the less you pay in interest.
6. Buy a Life Insurance Policy
If you feel that you can't afford life insurance for your family, use your tax refund to purchase a whole or a term life policy, and then make a yearly upfront payment to avoid monthly fees. The policy can provide your family with the protection they deserve, plus cover the cost of your funeral and burial. Speak with a life insurance agent to request a free quote.
7. Refinance Your Mortgage Loan
Do you need a lower mortgage rate? Are you looking to lower your home loan payment or cash out your equity? Refinance your mortgage loan and use your tax refund to pay for the home appraisal, the application fee, the credit report fee and any other mortgage related expense.
If you're fortunate enough to get a tax refund this year, there are plenty of responsible uses for this money. Although some people will blow this cash on electronics, clothes and other unnecessary items, it's wise to put this money to good use.
What do you plan to do with your tax refund?