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Best Ways To Spend Your Tax Return

April 6, 2016 Tax return season is here! It’s officially time for lobster dinners, spa days and filling your virtual shopping bag, right? Not so fast. Before you start fulfilling your cash daydreams, take the time to fully vet your financial situation. It’s okay to spend it—just keep your financial wellness in mind when you do. Here are several ideas to make the most out of that lump-sum deposit this year and still have some fun along the way. Ready? Set? Spend! (Smartly.) Play it safe and save. Before we get to the fun part, let’s talk about saving. It never hurts to have some extra cash saved up, whether it’s for (inevitable) emergencies like car expenses, or planned projects like home repairs. Here are a few ideas on what to save for if you aren’t already:
  • Emergency fund (Pro tip! Try to have at least one month’s salary saved…just in case!)
  • 529 College Savings Plan
  • Retirement (401k)
  • Home repairs
Dust off your debt. Another great way to use returns is to put the money toward reducing your debt. Have a lingering credit card bill from your latest splurge? How about your car loan payment? A great rule of thumb here is to start with credit cards, then work your way through other debt. We know it’s not as fun as buying that new pair of boots, but it will pay off in the long run, and make you feel much better the next time your monthly bill arrives. (Pre) pay to play. Prepaid debit cards are surprisingly efficient. You might find it helpful to allocate a portion of your return to a prepaid card for those smaller, daily purchases (e.g., groceries, gas, coffee). Why? Where most overdraft fees are anywhere from $25 to $35 (often costing more than the overdrafting purchase to begin with), prepaid cards don’t carry ANY overdraft fees because they don’t let you spend more than you have; it simply declines a transaction when not enough money is on the card. It’s pretty much like a gift card to any store on the planet. Hit the road, Jack. Got the travel bug? Have a special place on your bucket list that you just haven’t had the time (or money) for? Using your tax return for trips can be a huge help. And you don’t necessarily have to use it to pay for the whole trip, either. It’s most helpful to use your return to supplement the expense of things like plane tickets and gas money. Onward, savvy traveler! You give and you get. The gift of giving should always be an option. If you look at an extra sum of money you receive as a windfall, then it won’t be missed if you decide to donate it, right? As a member-owned cooperative, Summit Credit Union always has information on Madison-area charities or philanthropic organizations that accept donations if you need a place to start. It’s also worth mentioning that giving can reward more than just your conscience; many charitable donations can be itemized when filing your taxes, which could mean a bigger return for you in 2017! Half & half, please.  All this talk of savvy saving and smart spending can be daunting. We get that. Consider a half and half approach. What does that mean? Aim for spending half of your return on the not-so-fun stuff, and half of your return on the so-much-fun stuff. Try throwing half of your return into a savings account or toward your credit card bill right away when it’s deposited. Once that’s done, take the rest and splurge on that way-too-expensive purse or the girls’ trip that never happened. Because you deserve the fun stuff too. Well, there you go, savvy savers. (Or do you prefer “smart spender”?) Try these strategies for spending this year’s return and see if they help! Summit is always here to chat about   if you simply can’t decide. Enjoy the cash from Uncle Sam! All that’s left to do is decide exactly how you want to Own It. You might also be interested in The Help You Need to Get to "Yes" on a Future Loan or Credit Card Have you been turned down for a loan? Or are you worried past money issues might sto Whew – what a journey! has officially come to a close, and these four teams have been impressive. And they’re leaving this program with less debt, mo Financial success isn’t how much money you have — it’s feeling good about what you’re doing with the money you have. How can we help you avoid difficult money situations and put you in the best financial position for success? This question is at the heart of so many things we do here as your financial partner – including our decision to eliminate the non-sufficient funds (NSF) fee as of April 1. Are you struggling to come up with the perfect New Year’s resolution? Here are three great reasons why focusing on your finances should be a priority this year! It’s not every day that someone gives you hundreds, or maybe even thousands, of dollars for (seemingly) no reason. That’s what makes getting a tax return so exciting. So before that much-anticipated check arrives, stop and consider what you should do with your tax refund, as well as what you want to do. Simple, everyday choices can reduce consumption and our impact on the environment. Learn ways to be more eco-friendly…and your spending at the same time! Sometimes having a little extra cash is the only thing between you and your dreams. Check out these financial tips to be smart about borrowing money and avoid common mistakes. With a little planning, you may be able to actually save a little money during the holidays. Check out these tips to keep costs down without missing out on the holiday fun. 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