It’s that time of year again. Time to dig through all those crumpled up receipts, search your emails and print out your bank statements.
It’s tax season, and if you’re like 54% of Americans, you’re expecting a refund. However only 7% say they plan on spending that refund on something frivolous, like a vacation or a shopping spree. The majority, 84% of those receiving refunds, intend to pay down debt or use it for everyday necessities and bills.
So what should you do? Before doing anything else, if you’re getting a refund, it may be time to look at adjusting your withholdings. Sure, getting a little chunk of cash is nice, but chances are if you get a refund every year, you’re paying too much to the government. The money you’re getting back is basically cash you’ve given to Uncle Sam as an interest free loan. Stop and think about what an extra few hundred or thousand dollars dollars could do for you spread out over the year.
If this sounds too daunting or if you relish your refund, no worries. An estimated 75% of those who get these refunds will continue to do it this year. Call it forced savings or a self imposed yearly bonus. Whatever it is, people like it.
Ok, so you’ve received your refund. Now what? Should we tuck it all away or should be splurge on something cool? Let’s first address the latter.
Take A Trip
You’ve spent the entire year busting your butt, earning yourself a $2800 refund! Hazzah! Let’s say you don’t have much debt, or if you do you’ve said screw it. Let’s plan a trip!
We recently posted an article on vacationing in Canada. Due to fluctuations across the global markets, the Canadian dollar has taken a hit as of late. As of this post, it’s worth just $0.73 compared to the us dollar. A bummer for the loonie, but a win for American’s looking to save some cash.
If Canada isn’t quite your thing, why not take a trip to Disney? If you’re a family of four, the average Disney vacation will cost around $3,000 according to travel site Hipmunk. This of course doesn’t factor in prime travel dates or excessive park spending, but at least it gives you an idea of where you refund can get you.
Searching sites like Kayak and Hotels.com can help you add up costs for any destination. They key is to plan in advance and do your homework!
Buy Something Cool
Ok, a trip isn’t your thing and we’re cool with that. Maybe you’d rather just buy something. Maybe a hoverboard? No that would probably be dumb. Maybe new furniture? Many Americans buy big ticket items like furniture, mattresses and other large home items with their refunds. But let’s face it, if you were going to do something responsible like that, you probably wouldn’t be reading this.
Let’s go BIG. What would really make you look like a big spender? Impress the neighbors? What item would ultimately crown you as king king of your cul-de-sac? A commercial grade bouncy house. For just $2,749.95, you can own this “Patriot Mega Wet/Dry Inflatable Commercial Grade Bouncy House and Slide Combo”.
No kids? Even better. You can splurge on this bad boy: The Osaki OS-4000 Deluxe Zero Gravity Massage Chair.
“Soothe your aching and tired body with this zero-gravity heated massage chair from Osaki. Six massage styles, with the ability to focus on the neck, shoulders and lumbar area, deliver welcome relief to any part of your body.”
Sounds like money well spent, eh? Ok, ok. This may be a bit over the top. But how can you put a price on total comfort and relaxation?
Fine. We’ll move on. What about just asking the internet? Who knows better how to blow $3,000 than a bunch of people sitting on the web all day. Head over to this reddit page where people discuss blowing through $3,000 purely on luxury items. You’re sure to find an answer there.
Alright. You’ve shot down every one of our amazing ideas on how to spend your money. We get it. Its cool.
Paying down your current debt is likely the best use of your return. Why continue paying interest when you have the money to completely wipe out one of your credit cards or to pay down on other loans and bills? Many financial experts recommend either paying down debt or setting up an emergency fund. Chances are if you’re a homeowner, you know how hard purchasing a new furnace or replacing appliances can be when you’re not expecting it. Tucking away a few thousand now can help you weather those storms down the road.