Are you getting a tax refund? Hopefully, you planned your taxes so there are no surprises, but just in case….Let me be the killjoy against a wild weekend in Vegas.
- Pay-off high interest Debt
- Balance x Interest rate will tell you which to pay-off first. You may have a card at 23% interest but only a $500 balance (an annual interest bill of $115) versus a card with 12% interest but a $3,000 balance (a $360 annual interest bill)
- Top off your emergency fund
- 3-6 months of fixed expenses, just in case. Recession, failed water heater, etc. Avoid putting emergencies on the 23% credit card.
- Contribute to retirement funds
- We get this question ALOT. How much is enough? Our response is often; ‘How much do you want to spend in retirement?’ 10-15% of current salary is a good number.
- Set aside money for short term goals
- We have a client who wants to buy another house in two years. Maybe you want to put a pool in your back yard or you have your eye on a new car. Saving is better than borrowing.
- Pre-pay bills
- Imagine not having to worry about bills when you take off for vacation this summer because you pre-paid the bills?
- Put it toward education
- Whether it is paying down student loans, helping your children to avoid student loans or simply investing in knowledge for your future self (the BEST investment).
None of these may sound exciting, but we guarantee retirement is sweeter in a paid–off house as opposed to being under a mountain of debt.