How to Make the Best of Your 2014 IRS Tax Refund

Are you expecting a 2014 IRS Tax Refund?  Before you spend it on $300 jeans or a flat screen TV, consider spending your refund in the following ways.  It could mean a lot to your future self!

  1. Start an IRA.  No really, it’s a smart way to invest an extra stash of cash like an IRS refund.  Put it in a retirement account and you’ve discovered a pain-free way to save for your golden years.  It’s pain free because you’re not taking money from your regular paycheck (you’ve already done that by having too much taken out in the first place, which is why you’re getting an IRS refund).  You won’t even miss it.
  2. Join Lending Club.  If you’ve got cash to spare, then consider peer to peer lending.  You front the cash, and Lending Club finds people who need loans.  You get pretty good returns because of the interest rates the borrowers pay.  It’s risky since it’s not insured by the FDIC.  Same as stocks…there is risk involved.
  3. Pay off existing debt.  Of course this option should have been option number one.  The golden rule of personal finance is that debt comes first.  No matter what expenses you have, debt is what you should pay off first.  Even if your 2014 IRS tax refund is a few hundred dollars and you owe thousands, paying off just that amount will help you save in interest payments right away.
  4. Put it in a Health Savings Account. You can get cheaper health insurance if you have an approved Health Savings Account (HSA) and a high deductible insurance plan.  The money you put into this account is tax deductible.  That means less taxes paid by you!
  5. How about just save it?  Did you ever consider that?  You don’t have to spend your tax refund at all.  Not all money needs to be spent right away.  Just let it sit in a savings account for future needs.  Radical, right?