Friday, January 27, 2012

What To Do With an Income Tax Refund

One benefit of living simply is that it seems the less you make each year, the bigger your income tax return. I'm not saying this is a reason to quit your day job, but it is a perk. The middle class have it the worst when it comes to taxes. I know, because that used to be me.

Since Mr. Bushman and I both went part-time at work a couple of years ago (and now since we all live on only one part-time income), income tax season has become something to look forward to. This year, after having spent so much to move, put on a roof, install a wood stove, etc., I am looking forward getting our income tax refund more than ever!

For those of us who usually get a refund, sometimes it can be hard not to take all that money and make a big purchase. This year, instead of buying something, why not try doing one of these things with your refund?

1.  Pay something off. If you have debt (especially credit card debt), use your income tax refund as an opportunity to get rid of some of it! Paying off debt feels great and can help you take a big step in the right direction for the New Year by lowering your monthly bills. 

2. Save it. If you don't have at least six months expenses in an emergency fund, consider saving your income tax refund. Having an emergency fund is a huge stress reliever. Suddenly, the car breaking down or some other catastrophe is not the scary thing it otherwise might have been.

3. Pay a bill up for the year. If you have bills that could just as easily be paid by the year, do it. This will create less stress and worry in your life. Some bills that are good candidates for this are:
  • Insurance of all kinds, but especially house and car
  • Trash service
  • Property taxes
  • Propane--if you have a tank to fill up, maybe now is the time to set aside the money to do it. (As propane is usually cheapest in summer, then would be the time to actually buy it.)
  • Any bill that you pay monthly that could more easily or more cheaply be paid yearly.
4. Invest it. When I think of a good investment, I usually think of property--specifically income generating property. With the economy being so unstable now, where ever you choose to invest your money, do a lot of research before hand.
    In addition to putting money back for the usual yearly bills (house insurance, car insurance property taxes and trash service), we Bushmans will be saving our refund. We want to have extra in our savings because this spring we have some big plans coming up that will require extra money. You may remember we mysteriously purchased this business lot for the low, low price of $1,000.

    Our bargain commercially zoned lot.

    I didn't tell you then what we planned to do with it, but I am ready to tell you now! It is the future site of the Bushman self-storage facility! Isn't that exciting? We hope to get started building it this spring, but it depends on finances as well as Mr. Bushman's other time commitments.

    We have a very unconventional building method in mind for our storage units. It is eco-friendly and should be very cost effective as well. In fact, I think we can build the whole thing for less than $5,000! Any guesses as to how we are going to accomplish such a feat?

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