Have you found yourself about to be flush with Uncle Sam’s tax money?! Well, maybe not flush. Hopefully not flush because that would mean you overpaid on your taxes all year and gave the Government a free loan. Regardless, if you have extra money, what are you going to do with it?
There are a number of options for what you could do with your extra tax money returned to you this season. While I have written about things that you probably shouldn’t do in the past, today we will look over some of the good things that you could do this year to get you to move up a tax bracket next year!
Invest In Yourself
A lot of people are going to go out and get something for themselves. Maybe a new TV, maybe some jewelry or clothing, or perhaps they will use this money to move into a new home. I am sure you have already heard companies advertisements aimed specifically at getting your tax refund money. In fact, just this morning I heard a jewelry store advertising that you should buy your significant other something special for valentines day with your tax return. While that’s not a terrible idea, I did that for my wife’s engagement ring, it’s not the best idea if you can do something else with it.
What I am talking about with this Invest In Yourself idea is that you take that extra money that you didn’t realize the Gov had and spend it on something to get you ahead in life. Maybe you have an idea of starting a blog or a YouTube channel but you need a computer or a camera to get started. Whatever the business idea you have in your head doesn’t necessarily matter, but having some extra startup money does, and this is your opportunity.
Or you could go about getting yourself some new clothing, provided that you actually need that clothing to move ahead in life. If you’re young and just out of college without any work appropriate clothing this is a good opportunity to get yourself spiffied up! Not sure if spiffied is a word, but dibs on creating it if it isn’t. It makes sense, right? The past-tense version of the word spiffy. Rappers get to make up words all the time! Stop limiting my potential inner monologue!
This would also be a good cash windfall to help you get new books on whatever it is that you’d like to learn about. Maybe you would like to learn a new language, or learn about starting a business, or literally anything else that will add value to who you are as an individual. This is a great time to choose to head down that path!
Pay Off Debt
This is by far the best use of some extra money you didn’t know you had. If you have any outstanding debt using your extra cash to pay it off is a great use of that resource. You shouldn’t be carrying a balance on any credit cards so putting any tax returns towards your credit card debt is muy bueno! That’s what I am planning on doing with all of my tax return money. Ain’t no shame here. Well, some shame, but at least I am actively working at fixing the problem.
You may also be able to put some extra money towards your student loans or other long term debt like a car or house loan. As long as you’re making payments to the principle loan amount, and not just paying interest ahead, you’ll be thanking yourself a couple of years down the road. I have heard stories of people putting thousands of dollars extra towards big payments like this and finding out later it didn’t go to the principle amount, so if you’re planning on that just make sure you set the record straight. I would assume it wasn’t an intentional thing on the loan providers part in these internet stories, since fellers should always look for the best in other people, but, nefarious or not, these things can happen. Just make sure it doesn’t happen to you!
Move Your Life Forward
I can’t speak for you, feller, but perhaps there’s something you have going on that you didn’t read about above. Maybe you’re looking to move. Or start a family! Or maybe you’re looking to get out of a bad situation in life or a bad relationship. Maybe you have some killer investment thoughts and you just need to start somewhere. This could be your opportunity to do that, and I fully support your ideas as long as you’re trying to move forward in life. After the next paragraph this one will make more sense, but as long as you’re spending money to make yourself better, happier, or a more complete person, you will thank yourself for spending money on it now.
This would be a great time to invest in an index fund! Especially if you’re not someone who is interested in watching the stock market each day, which I know you’re not because you’re reading this site. We’re fellers here, not samurais.
Just Don’t Buy Stupid Crap!!
Whatever you plan to do with any extra money you have at this time of the year, don’t buy some stupid crap with it. I can tell you from experience that buying something that sounds good in the moment, regardless of intention, won’t feel good later on. Take my racing seat for example. I bought it thinking that I was going to build a YouTube channel around it and start playing games with my best friends more often. It was also going to be a tool for training regions of my brain that can’t be trained any other way (like reactions or something, I don’t know). I put down some serious cash for that thing and damn near herniated a disc trying to move it into place. But what ended up happening was I tripped over it every morning getting out of bed and ended up storing it in my garage long term.
Sure, I could still build up a lifestyle around it, and I do plan to, but I didn’t need to make that move then. I could have spent that money on debt back then when it was lower, gotten further out of debt, or gotten into some investing earlier in life to position myself better today. The impulse to get yourself something that you want at this time is very strong, and I know first hand how difficult it is to overcome. But I am here today to tell you that you CAN do it. You can take this opportunity you have here to move yourself forward in life so long as you’re not spending it on some depreciating asset without a use plan.
Basically, there’s two kinds of things to spend your money on in this world. You can spend your money on a depreciating asset, like a computer or a car, or you can spend your money on an appreciating asset, like a productive business or shares of a productive company. Sure, stock values go up and down daily and seem to lose money without reason, but ultimately stocks, especially the market as a whole, will go up over the long term. This is your opportunity to spend some money on a valuable asset and I hope that you won’t make the same mistakes I have made in the past. That’s not to say that buying a computer or some other depreciating asset is a bad idea, provided that you have a plan to make it productive. No video game or console has ever gained money in the short term. They can become collectors items, but more often than not they end up in a landfill. If you plan on buying something that is going end up in a landfill this tax season, please have a plan to make money off of it before you put it there.