Another year has flown by, and just like those before, you’ve found yourself receiving a juicy tax return. I’m sure you’ve heard all about how “your tax return is the money that has been held away from you all year”, and that “you shouldn’t even want to be receiving one”. Now whilst these statements are indeed correct, the reality is that most people don’t have the know-how to make that happen, and even if they did, receiving a tax return is often seen as a free end-of-year bonus, who would want to give that up?!
For feasibilities sake, I’ve decided to come up with a list of what you can do with the money you receive (on a scale of importance) to give some proper ideas. If for future years you’d like to pursue the zero tax return method, please feel free. This year, however, take care of what needs to be done with what you’ve gotten back.
1. Pay down ALL Credit Card Debt. This should be the first thing you take care of (assuming you’ve received enough through your tax return) as the carrying forward 22% interest charges will slaughter your chances of being financially sound.
2. Make an additional payment to your mortgage/home-equity line of credit. This is assuming your mortgage is open (or the pre-payment expenses aren’t excessive) so that you don’t do unnecessary damage to yourself. It may seem like a small amount when compared to the overall balance, but every dollar counts when you’re cutting down the interest costs of a debt so large.
3. Make contributions to your registered accounts. Although the RRSP deadline is passed, set aside some money to contribute to your 2018 portion – the contribution rush will be coming around sooner than you think. If you haven’t already, make your yearly contribution to your TFSA ($5,500 for 2018 + any carryover you may have), or if it applies to you, throw some money into an RESP. The options for registered contributions are endless!
4. Buy something you actually need. Although not the most exciting of purchases, buying things you actually need (or at least putting the tax return amount towards them) will help lessen the burden. These could be things like new tires for your car, new shingles for the house – the list goes on and on.
5. Give to charity. If you’ve already taken care of all of the above, you’re clearly doing something right. Maybe consider giving some money to charity – it’ll help you out during next tax season and it will also make you feel like a million bucks.
6. Blow it. If you have no debt, have fully maxed out all of your registered accounts, have fully upgraded and renovated everything you own, already donated your left arm, AND are reading this blog for some reason – spend your tax return on whatever Amazon has that grabs your attention. Life-sized Big Foot statue, anyone?
I’ve yet to find $500-1,000+ in the pocket of a coat I haven’t worn in a while, I assure you that this is the closest you’ll get! Take your 2017 return and put it to work, don’t let it ‘easy go’ as oh-so-many do.