Note: This blog was originally published in March 2014 and has been updated.
Not many people like filing their taxes, but there is a bright spot to completing all those forms: getting that sweet, sweet refund. You can use the money any way you’d like, but why not put it towards having a more financially stable future? Here are some great ways you can get the most out of your tax refund.
Whenever you come into extra money, it’s always a wise decision to pay off any existing debt you may have. Reducing your debt will help improve your credit score, which in turn will make it easier for you to be approved for a mortgage, car loan, or even a job. If you already own a home, put some of the extra cash towards paying off your mortgage. Applying extra payments toward to your debts now will allow you to save money going forward, because you’ll be paying down the principal and any interest that has accumulated. Having less debt not only gives you more financial freedom, but also more peace of mind.
Buying a home involves more than the cost of the actual house, and two such fees you will need to consider are down payment and closing costs. While it might not be necessary to have a 20% down payment anymore, you should still try to save at least 3-5%, and closing costs are typically 2-5% of the home price. Depending on the price of the home you want, this can be a sizable amount of money. If you put your refund towards your house fund and continue to add to it, you’ll soon save enough to cover all expenses of buying a house.
Another practical use for your refund is to finance home repairs or improvements. Most households have at least one feature that needs to be fixed or updated, and you’ll increase your home’s livability by making those needed repairs. Maintaining the upkeep of your home and making improvements can add to your home’s equity. The cost of the upgrade could even be tax deductible; you should speak with a tax preparer to see what you’re qualified to deduct. If it comes time to sell your home, it will only benefit you to already have everything in good shape.
It may be tempting to blow your refund check on a huge TV or an extravagant dinner, but consider investing in your financial future instead. By spending your refund on things that can make positive and lasting changes to your life, you can make your money work for you!
NFM Lending is not a Financial Adviser or Tax Consultant. Please make sure to consult your own Financial Adviser or Tax Consultant regarding the use of your personal tax refund.
Now that tax season is over, you may be wondering what to do with your tax return. A great way to put your tax return to good use is to invest in home renovations that you may have been putting off. Here are several ways you can get the most out of your tax return and home renovation projects.
Preventative Maintenance If your house has any safety hazards, address these first. Check your home for anything that could lead to a falling accident, such as broken handrails or cracked walkways. Test your electrical outlets, check your gutters and downspouts, and look for any wear and tear on your water pipes in the kitchen, bathrooms, and laundry room. If you haven’t inspected your roof recently, consider having an inspection done. It costs a few hundred dollars, and can save you thousands in repairs later on.
Renovations under $500 If you’re looking to keep your expenses under $500, consider some of these inexpensive home renovations.
Update Your Front Door – You might be surprised by the difference new hardware and paint can make. Installing a new doorbell or lighting can cost as little as $100 or less. A fresh coat of paint and a new doormat are other cost-effective ways to update your front door’s look and improve your curb appeal.
Replace Your Toilets – Not only will a new toilet make your bathroom look newer, but it can save you money in the long run. Newer toilets use about 1.2 gallons of water, while toilets installed before 1995 can use as much as 6 gallons. Replacing a toilet can cost about $100-$200.
Invest in a Surge Protector – A power surge or any similar malfunction can cause thousands of dollars worth of damage. Protect your electronics by having an electrician install a surge protector for about $300.
Renovations under $1,000 If you have a $1,000 budget, try these home renovations.
Remodel your kitchen – $1,000 can go a long way in your kitchen, especially if you take the DIY approach. Painting your own kitchen will cost you about $150, depending on the size of the kitchen. Refurbishing your cabinets is a cost-effective alternative to installing new ones; a professional can sand, prime, and paint your cabinets for about $550, and it costs even less to do it yourself. Click here for more inexpensive kitchen remodeling tips.
Replace Your Washing Machine – A new high-efficiency washing machine can save you money on your water and heating bills. Energy Star-certified washing machines can save you as much as $100 annually on your utility bill, and run for about $600-$1,000.
Install a Fireplace – That fireplace you’ve always wanted isn’t as much of a splurge as you might think. Ventless fireplaces offer all the benefits of a standard fireplace without a chimney. An electric fireplace insert costs about $500-$1,500, while an alcohol-gel fireplace costs about $270-$470.
Renovations under $2,500 If you’re looking for a more dramatic change, check out some of these renovations under $2,500.
Replace Bathroom/Kitchen Flooring – If your bathroom or kitchen floor is starting to look worn or cracked, installing new tile flooring is a great way to update your room’s look. It costs about $2,000, depending on the type of tile and the size of the room.
Install a New Garage Door – Nothing says curb appeal like a new garage door. A typical wood or steel garage door costs between $550-$1,650 including installation, while a double door costs between $800 and $2,500. And if you’re an experienced DIY renovator, you can save money by installing your new garage door(s)
Paint Your Home’s Interior – Give the inside of your house a mini-makeover with an updated paint job. Since the size of each home varies, it is a good idea to plan out your project and estimate the cost of painting each room before you begin. This article has some good tips on carrying out this type of project. The cost of an interior paint job for an entire house is about $2,000, including paint and supplies.
Spring isn’t just a great time for spring cleaning, but a great time to update and renovate your house. This is especially a good idea if you’re planning to put your house on the market soon. If you’re looking to move or refinance your current home, talk to one of our licensed loan originators today to get started.