Best uses for tax returns, especially the unexpected ones
Tax returns are one of life's little sweetnesses, and unexpected tax returns are even more so. We work hard for our money, and it brings tears to our eyes to think of how nice the government is for volunteering to hold back a huge portion of it for us in order that we not spend it all in once place.
BUT-now we've got it; what was ours is still ours, and what's even better it's finally ours as our fourth-grade daughter's Dollar Store paperback dictionary defines the word, which is (loosely interpreted) "money in a personal bank account accessible at any time and for any reason by the earner instead of money in a government bank account accessible to the earner assuming said earner is not allergic to bullets, razor wire, and grinding, remorseless fangs of killer Doberman Pinschers." That said, what should we do with it? What are the best uses for tax returns, expected or otherwise?
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1. In a short article such as this is, of course, we can only examine a few of the possibilities. And we must, being responsible wage-earners, consider practical things first. The best use for tax returns, then, is to pay off overdue bills, get little Jimmy's glasses repaired, fix the dryer, etc.
2. The best way to make practical decisions regarding your tax return is to sit down and make a quick (or a thorough, if you'd like) budget. What do you spend each month on essential items such as groceries, gas and heating, insurance, and so forth? Once you've got that more or less worked out, you can move to non-essentials such as movie tickets and eating out. Now, by "non-essentials" we only mean that they're not on your physical survival list. But mentally, obviously, relaxation and entertainment and socializing are as important as taking your vitamins.
3. We're trying to figure out how to best use our tax return, so we've made a budget and see that the essentials list tells us we need a hundred dollars to pay for Jimmy's glasses and to sign Susie up for cheerleading lessons like we've been promising to do all year. That, then is the first and best use for our tax return. What's next?
4. If we want to stay on the practical side, we can always put our tax return into a savings account and therefore benefit from the interest that accrues. We can use our tax return to make investments that will redound to our good later. We can fix something on your computer, get better cable TV, and so forth. Obviously, there's no scientific formula for deciding where best to put that tax return.
5. A helpful rule of thumb, then, when deciding on how best to use your tax return, is to start with those things (such as unpaid bills) that are dragging you down, causing you anxiety, sleeplessness, depression, and so forth. We might be tempted into thinking, Well, I do 500 dollars on that entertainment center, but a nice vacation would relax me too. That's true, to a point. The fact is that your vacation wouldn't be as relaxing knowing you had this big debt to go back to, and once you got back to it you'd be in the same quandary as before.
6. If you're doing pretty well with your bills, though, and you have life's essentials pretty well taken care of, and you're not particularly interested in an investment, the best way to use that tax return is: have a good time!
7. Perhaps you have some money saved for a trip to your favorite ski resort. You could use your tax return to supplement your savings and go sooner than you had planned. Perhaps you wanted to buy your wife a special gift for her birthday, only you couldn't quite justify it with your current budget. What better way to use a tax return than to gladden the people you love?
