This year, my husband and I were worried that we might owe taxes. Instead, to our surprise, we received a several thousand dollars refund. We have received our refunds and have the money sitting in our savings account until we decide how to spend a tax refund—we have so many options that would make good use of the money! Here’s what we’re considering:
How We Might Spend a Tax Refund
If we had credit card debt, we would apply the tax refund to the balance. However, we have no credit card debt. Instead, we have student loans and a car payment for a new car we bought in March to replace our 18.5-year-old vehicle.
When my husband took his new job, I was excited because his employer offered free dental insurance. However, now that I need some significant dental work, I’m learning that most dentists in our area won’t take this insurance because the insurer pays so little on claims. I’m still investigating other options, but we may have to pay for the dental work out of pocket.
Will and Trust
I was pregnant with our third child when we decided to do an online will and trust. We have since moved twice across the country. While I was packing during our most recent move, I found the will and trust and discovered we never signed it! We got the paperwork thirteen years ago and in another state. Rather than try to redo the internet version, we’d like to go to a lawyer and have our will and trust drawn up by a professional.
Increase Emergency Fund
We currently have a one-and-a-half-month emergency fund. Eventually, we’d like to increase that to six months. Putting some of our tax refund in the emergency fund would increase it to two months.
Pay Down Our Car Loan
We have a car loan for our new vehicle. If we applied all of our tax refund on the loan and continued making regular monthly payments afterward, we could pay the car off in three years instead of five years. This is tempting.
Make Home Improvements
We bought a house that is 22 years old, and the windows need to be replaced. Last year, we replaced our daughter’s window because the wood was rotting and there was a hole in the wood. The master bedroom windows are next on our list because the wood is deteriorating.
We could also use some of the money to replace the floor in our daughter’s bedroom. (We moved in last year, and the carpet is bright green and original to the house.) She adapted to the ugly, worn-out carpet, but it does need to be replaced soon.
Any of these choices or a combination would be an excellent way to spend a tax refund. My priority is figuring out the dental piece first. Once I know how much my dental procedure will cost and what our insurance will pay, we’ll know how much of the refund we’ll have left and can plan accordingly.
Melissa is a writer and virtual assistant. She earned her Master’s from Southern Illinois University, and her Bachelor’s in English from the University of Michigan. When she’s not working, you can find her homeschooling her kids, reading a good book, or cooking. She resides in New York where she loves the natural beauty of the area.