Let’s be honest, if you are eagerly awaiting your tax return, you are not planning to spend it on the right things. Too often people get a chunk of money they usually do not receive at any other time in the year and their eyes light up. If you are really excited to get your refund this year, it is doubtful that you plan to pay off credit card debt, take care of healthcare-related expenses, or pay down your car loan. Read on to find out why you should do exactly those things.
PLEASE Use Your Tax Refund to Pay Down Credit Card Debt
If there is one good thing you do with even a portion of your tax return, make it credit card debt annihilation. You would be hard pressed to find a loan with a higher interest rate than that of a credit card. Use this year’s tax refund to reduce the savage interest payments you make every month and lower the principal balance. The average tax refund in 2017 was about $3,000. The average credit card debt was approximately $6,375. If you are average, you could save yourself a lot of money in interest payments by cutting that debt in half.
The most common debt on a person’s credit report is that of medical expenses. Medical expenses are the number one cause of bankruptcy. Medical debt is often passed around from collector to collector until something is done about it. Every day people are hassled and sued for medical debt worth less than $1,000. If this is you, please use your tax refund to pay it off. Negotiate with the collector and save yourself some money, but most importantly, improve your life by stopping the phone calls and snail mail associated with this sort of debt.
Pay Down Your Car Loan
Maybe you have always had a monthly car loan payment and you do not know what is like to exist without one. Let me tell you, it is possible, and it is SWEET. Imagine a world where you get paid and you do not have to fork over 25% of your paycheck. Take your tax refund and pay off even a few months of your loan term. Down the road, you will be so happy you did. This will save you from paying expensive interest if your rate isn’t great.
Paying off debt with your tax refund is one of the best things you can do for yourself (albeit not fun). If you are ready to take your debt seriously but you do not know where to start, contact Elias Dsouza. Elias can help you plan and negotiate the elimination of your outstanding debt.