Your Money Seven ways to make your tax refund more rewarding
If you’re expecting a tax refund this year, it’s tempting to simply put it into your checking account for smaller, short-term purchases. This year consider using it for something that has a long-term effect on your financial or emotional well-being.
1. Pay off your credit cards.
Of all of the different kinds of debt you have, it’s your credit card bill that is costing you the most in interest. While other loans may charge from 5-12% in annual interest, most credit cards charge 18-25% annually. Even if you pay off just a portion of the total amount, your savings could be significant. Also, unlike the interest you pay on your home mortgage or equity loans, the interest is not tax-deductible.
2. Contribute to an IRA.
Contributing to a traditional or Roth IRA has tax advantages. Traditional IRAs are usually tax deductible during the current tax year, so it may be a good time to start or add to a fund. You have until April 15 each year to make a contribution to an IRA for the previous year. Unlike traditional IRAs, money invested in Roth IRAs cannot be deducted during the current tax year, but they do have long-term tax advantages.
Royal Neighbors offers both Traditional and Roth IRAs, so contact our Home Office toll-free at (866) 845-6665.
3. Purchase a Royal Neighbors annuity.
There are three great options:
Flexible Premium Deferred Annuity – you can add to your annuity as your income rises
Single Premium Immediate Annuity – provides an immediate stream of income
Single Premium Deferred Annuity – initial amount grows tax-deferred
4. Renovate your home.
Your refund probably would not cover a major home renovation, but it might pay for a much needed repair. Even using the money for a decorating project would give you long-term enjoyment and could increase the marketability of your home if you plan to sell it eventually.
5. Plan a vacation.
With ongoing monthly expenses it may seem difficult to save for a vacation for you and your family. While this may not have financial benefits, it may have other rewards: a closer family, a new outlook on life, reduced stress, and related long-term health effects.
6. Set up an emergency fund.
Many families live from paycheck-to-paycheck and don’t have money set aside for home or car repairs or an unexpected medical bill. Place the money in a separate savings account or short-term CD so it will be there when you need it.
7. Buy more insurance.
Studies have shown that most families don’t have enough insurance.
Call one of our representatives at (866) 845-6665, and she can help you with your life insurance needs. To find out if you have enough life insurance, use our online insurance calculator at: www.royalneighbors.org.
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