A vacation would be fun, but you’ll get more bang for your buck if you invest in energy-saving improvements or maybe even a new car.
Many people say they are being responsible with their refunds: 42% plan to use the money to pay down debt and cover bills and 25% plan to save it, according to a survey by TurboTax.
Others are splurging: 15% of taxpayers plan to treat themselves to a vacation or shopping. But advisors say that even if you’ve done everything right — you have an emergency fund, no debt and are maxing out your retirement account contributions — you might want to reconsider spending the refund on a 70-inch TV or a cruise. Here are some of their suggestions below.
1. Rebalance your portfolio.
With the stock market hovering near five-year highs, advisors normally would recommend investors rebalance their portfolios by selling stocks and using the proceeds to buy bonds or whatever assets they need to get back to their target allocations. But some investors might be able to rebalance without selling their stocks.
Have questions about investing? Set-up an appointment with the Financial Advisor located at First Financial Federal Credit Union.* Appointments can be made at any branch location, or by calling 732.312.1565.
2. Prepay your bills.
Even if you’re not living paycheck to paycheck and can afford to spend your refund on a new iPad without falling behind on your bills, there may be better uses for the cash. Though it’s not nearly as exciting, one can use the money to pay off future bills. Why not use this money to put yourself ahead of the game?
Prepay your car insurance bills or car loan payments. Write the phone company a check, or save the money for the home insurance bill you know is coming up in a few months. But don’t forget to check monthly statements to be sure you aren’t paying for something you didn’t request, experts say.
If you’re going to spend it, take a look at your house. If your furnace is on its last leg, now may be your chance to replace it. Have you wanted to install new windows? Using the money on your home could lift your property value and prevent future damage, advisors say. People who make energy-efficient improvements might also qualify for a residential energy tax credits expiring at the end of this year. To get the maximum credit of $500, taxpayers need to make $5,000 in qualifying improvements to their stoves, heating or air conditioning systems, insulation, roofs, water heaters and windows and doors. Learn more here.
Did you know First Financial has a home improvement loan?** This loan is perfect for those who don’t think they have enough equity in their home. Or maybe you’ve been itching to put in a new deck or pool for the nicer weather. Stop into any branch to ask us how you can get started with a home improvement loan, give us a call, or apply online here.
If the list of needed car repairs is piling up, some advisors say it might be best to put your check toward a new ride. A $3,000 refund can cover the typical 10% down payment needed on a $30,000 loan for a new car, or the 20% down payment needed on a $15,000 used car. Don’t forget that First Financial’s auto loan rates are the same whether you buy new or used!***
Those with existing car loans may also have a greater shot at refinancing to get a lower rate (some saving hundreds of dollars a month) if they use some of their refund cash to reduce the size of their loan.
Try our auto loan calculator called AutoCalcubot to help you see how you might fare with monthly payments on a vehicle you’d like to purchase. The application works through Facebook, but you don’t need to have an account or even be logged in to try it! Simply enter what your vehicle costs, the amount you plan to put as a down payment, and your term – and you’ll get our rates and what your monthly payments would be.*** You can also save your results for later, email them to a friend, set up text or email alerts to see when our rates change, or apply right online if you like what you see.
* Representatives are registered, securities are sold, and investment advisory services offered through CUNA Brokerage Services, Inc. (CBSI), member FINRA/SIPC, a registered broker/dealer and investment advisor, 2000 Heritage Way, Waverly, Iowa 50677, toll-free 800-369-2862. Non-deposit investment and insurance products are not federally insured, involve investment risk, may lose value and are not obligations of or guaranteed by the financial institution. CBSI is under contract with the financial institution, through the financial services program, to make securities available to members.
**Available on primary residence only, subject to underwriting guidelines. Subject to credit approval. A First Financial membership is required to obtain a home improvement loan and is available to anyone who lives, works, worships or attends school in Monmouth or Ocean Counties, NJ.
***Subject to credit approval. Rates shown are lowest possible and may not apply to every borrower, and higher rates may be charged depending on credit qualifications. A First Financial membership is required to obtain a First Financial auto loan and is available to anyone who lives, works, worships or attends school in Monmouth or Ocean Counties.