It is nice to splurge when you have a little extra cash. It is important to save, too. Decide to use a portion of your refund to make your financial life a bit more secure. Here are some ideas:
Create an emergency fund. Put at least $500 ($1,000 if you can) in an account that you never touch unless there is a dire emergency – as in rent, utilities or repairs on a car you need to get to work. Add something to the fund – even as little as $2.00 every time you get paid. You can also open a retirement account. Start saving with myRA, a retirement savings account from the United States Department of the Treasury. No costs or fees, no complicated investment options, no risk of losing money. Don’t worry, you can withdraw your money without penalty if you need to. Learn more at myra.gov.
Pay down debts – if you have outstanding utility bills, medical bills, student loans, etc., now is the time to negotiate with creditors. Ask if they will accept a smaller, lump sum amount to pay the debt off so it doesn’t get in your way later. If you have a lot of debt that you do not realistically expect to be able to repay, consider using the money to file for bankruptcy. Talk with a credit counselor first, ClearPoint, formerly CredAbility, is a good resource – credibility.org. You may also qualify for an income based student loan repayment plan. In December of 2012, Obama signed into law a federal student debt relief plan called Pay As You Earn — PAYE for short. The program limits your monthly payment to 10 percent of your discretionary income. You may even qualify for loan forgiveness. Learn more at http://www.consumerfinance.gov/paying-for-college/repay-student-debt/
Invest in your car – if your vehicle has been needing work, get it done now so you don’t find yourself on the side of the road later.
Pay off any evictions – This is really important because you will be in a stronger position to rent when you are ready. Ask if you can pay a reduced amount. Get payment documentation in writing. Check your report for free at annualcreditreport.com to be sure derogatory rental history has been removed.
Pay off fines – pay off or catch up any tickets, fines or probation fees.
Buy a washer and dryer – trips to the Laundromat can be a drag. This may be the time to invest if your home has connections.
Pay your car insurance in advance for the year. You might also make rent or car payments ahead, just be sure the creditor understands your intentions and credits the payments properly.
Invest in your health – maybe you have put off visits to the doctor or dentist because you didn’t have insurance. Use a portion of your refund to have your body and teeth checked out.
Invest in yourself – maybe you have been wanting to get your CNA, GED, or learn to be a bartender or hair stylist. Now is the time to get trained and licensed.
Start a small business – do you crochet, make plates or jewelry? Use a little money to invest in some supplies. Use the proceeds to buy a few more. Get a PayPal account and sell your goods on Etsy, Amazon or eBay.