People are frantically working on their taxes now. The IRS will be working to process refunds as they receive tax returns. It is an important period of time for many. Receiving tax return money may alleviate the need for cash advances or squelch credit card dependency for a while. Depositing a return into the bank may promote thoughts of spending on all those “wants” which didn’t land under the Christmas tree, but it might help financial matters if those “wants” continued to take a back burner to “needs”.
Pay off a cash advance with a tax return.
Getting a tax refund is delightful. For many people, this money is relied upon to make financial matters work. There are many uses for extra cash, but when used to promote financial stability, it will turn out to be an incredible tax relief. How could you use this money to help your finances?
- Any amount of money which can be placed into a savings account helps future financial transactions.
- Pay off any cash advances or payday loans.
- Pay down any high credit card debt. Remember, the credit bureaus will want to see less than 30% of the credit limit carried as a monthly balance.
- Catch up on any past due debt.
- If you have held back on repairs to your home or car, use this money to get it done before the problem intensifies.
- Put the money aside for later purchases rather than using credit cards.
- Pay towards your retirement.
It would be nice to just have that money as play money, but in today’s world it is much better to plan ahead to prevent emergencies from becoming disasters. Many people use a cash advance online as a way to access emergency cash. When there is money in a savings account, there is less likely a chance that third party money will be necessary. Using your own money is a money saving idea! A substantial tax return may just put you in the position to save in the long run.
Cash advances left unpaid will increase with large interest payments.
That cycle of debt notion to keep using third party money just so you can make payments towards other debt is not imaginary. Cash advance and credit card companies profit from this debt cycle. People living paycheck to paycheck live in the reality of being burdened by their debt. If a tax return is used to alleviate the demand, there will be more income left over each month in order to continue building financial portfolios. Build up savings accounts, prepare for retirement opportunities, or plan for a child’s higher education costs and continue to make steady payments to lower debt while keeping from adding more to the mix.
That’s right; part of any financial plan should keep current and future money in the forefront while working to pay off debt of the past. As much as it should feel good to use your tax refund and fly off to a favorite vacation spot, it may not prove to be the best option for the long-run. It is good to treat yourself with some of it, just not the larger portion of it. As long as there is outstanding debt, it will be a best practice to not increase debt elsewhere.
