If you are expecting a tax refund this year-now is a great time to put that money to work! Here are five ways to spend your refund to reach YOUR financial goals by investing wisely.
#1 : Pay Down Credit Card Debt
If you are like many Americans, reducing or eliminating credit card debt is a top priority this year. However, every retailer and car dealer out there is already starting to run sales in anticipation of this time of year when you get a little cash in your pocket. Avoid the tricks and stay on track! Paying down your highest rate of debt, which is most definitely your credit cards, frees up available disposable income and feels fantastic!
In the realm of real estate: Cutting out credit card debt creates an awesome snowball effect. Less credit card debt means more cash each month and better credit which often means lower interest on car loans or cash to pay up front for vehicles. This means you’ll be on track for getting your first mortgage, roll into a better home or even snatch up a rental! Best of all—the rates charges on real estate loans are tax deductible. Wonderful!
#2: Start a Savings Plan
Life is full of chances for good. Start this year with a dream and a plan. People who save get better and better at it. Whether it is a down payment for a home or a vacation figure out how much each week you need to save to reach your goal. Earmark your paycheck and deposit twice: FIRST to savings, then your regular account. Mark your calendar to check your progress after 3 months and take a moment to enjoy your progress. Talk about your goal and your successes as you progress.
#3 Create an Emergency Fund
We do not live in a perfect world. Mortgage payments come every month and vehicles are always breaking down. Most Americans change jobs EIGHT times in a lifetime. This means that it is wise to have money set aside for a rainy day. You’ll need at least a three month safety net in these hard economic times. I, and Suze Orman, recommend starting and building this fund even before tackling your credit card debt since job loss, illness and pay freezes are such common stressors-both financially and emotionally!
Do you consider credit cards you’re safety net? Going with a real estate loan is a much better call. A second mortgage often has a low, tax deductible rate with interest-only payments. In good times and bad, a home is often a great emergency fund!
#5 Pay Your Property Taxes
You’re going to need to pay them anyway and keeping your mortgage payment low can make for a better year. Each month you’ll have extra money to use to reach your goals or if you’re like a lot of homeowners: just keeping up can be difficult at times! I know it is not exciting but having one less bill to worry about can make all the difference in the world when you’re in time of change: job, children or marital status. Worry less and enjoy your home!
#5 Buy Real Estate
By now, you could see this coming! Buying a home or a rental can help take your family’s future to the next level. Paying rent just pays someone else’s mortgage. Did you know studies prove that homeownership is even a factor in better school test scores? Here’s a great example: A $100k home loan has about $10k worth of payments a year, less than $1k a month. Of the $10k, about $5k would be tax deductible vs. a rental for the same price. Add in the deductible property tax and the tax savings are incredible! Do something good for you and yours: buy now while rates are at record lows!
Already have a home? Time to invest: a rental is good choice. It is almost always on a shorter term loan and right now are HOT in Casper. I love selling rentals and watching them build true, honest wealth. It is the only investment you can physically walk in and do something with. Most will take 5-15 years to pay off entirely: imagine when your child is a teen or headed to college and you have extra income? An extra asset compliments your financial portfolio!
That’s it! Now take that return and put it to work for you! I’ve got all kinds of good tricks for saving and investing-wherever you start. Please do not hesitate to put me to work for you! Thank you for reading my thoughts and know I wish you all the best, Rita Parker.
No Place Like Home Real Estate Inc.
