What you can do with a tax refund or an unexpected windfall?

Monopoly board income tax

If you’re one of the lucky Americans who will get a tax return this year you may be faced with a pleasant dilemma: what do I do with this extra money?

From “splurge and treat yourself!” to “put it under your mattress,” there are a lot of options, but here are BrightDime, we love to see you pay yourself. Here are some bright ideas on how!

Pay yourself by paying down debt ahead of schedule.

As long as the loan doesn’t have a pre-payment penalty, you can pay it down ahead of schedule with your refund, and pay less overall in interest because of it. Whether it’s credit cards, student loans, or an auto loan, paying down debt early saves you money in the long run.

Pay yourself by creating a rainy day fund.

We think $500 is a good start for keeping cash on hand in case of emergency. It could be unexpected car repairs, medical bills, or childcare costs. Having some extra money saved away where you can get to it when you need it keeps you from having to put that unexpected expense on a credit card or have to get a high interest loan to get by.

Pay yourself by investing in your future.

This could be a literal investment in a retirement account like an IRA or it could mean putting this money towards education, job training, or investing in your health.

The important thing is to make it count.

The newness of that gadget, piece of clothing, or video game will wear off fast. But if you pay yourself the effects will carry forward and put you in a much better position in the future.

Have an idea on how you want to use your tax refund and get another opinion on it? Head over to the dashboard and chat with a BrightDime coach today!