RICHMOND, Va. (WWBT) - It’s the windfall most of us look forward to this time of year! Your tax refund. Don’t blow that money-- without considering these three options.
If you are carrying around high interest debt-- think a credit card-- pay it off. We’re talking about anything carrying an interest of 6% or higher-- pay that off first with any extra money. It will save you in the future from paying interest.
Second, Arielle O’Shea with the financial website NerdWallet tell us to create an emergency fund-- or if you already have one, boost it! You need to have a thousand dollars in savings-- and then work to make it 3 to 6 months of expenses.
And third-- think about investing your tax refund. “You can’t put a lump sum into a 401K most of the time but you can put a lump sum into a IRA and if you don’t have an IRA this is a good time to open one,” said O’Shea.
And this is also a good time of year to look at how much you are withholding from each paycheck.
And this last piece of advice is sort of painful for people, but ideally you don’t want to get this windfall. You want to get this extra money in your paycheck throughout the year, not give the government an interest free loan.
And if you do that-- then you can direct that money back into your 401K
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