It’s that time of year when folks wait impatiently for Uncle Sam to send them a big, fat tax refund check.
Chances are, that refund check is the biggest “paycheck” you’ll get all year. You are being given a golden opportunity to create positive change in your life.
Don’t blow it!
Just a little advance planning is all you need to transform that tax refund check into a launchpad for a more secure financial future.
In recent years, the average tax refund has hovered between $2,800 and $3,500. For the sake of our example, will be conservative and use a figure of $2,700.
Take 40% of your $2,700 tax refund and put it right into an interest-bearing savings account. That means you’ll have $1,080 stashed away in case of an emergency.
Why is an emergency fund so important? Because the fastest way to wreck your budget and max out your credit cards is to be faced with an emergency that you cannot pay for in cash. Cars break down, kids fall off their bikes, and water heaters flood basements all the time. Would you be able to pay for these emergencies in cash?
Sure… $1,000 bucks isn’t going to cover every emergency. But it’s a start. It’ll be up to you to find ways to stash away a little more money every month to keep your emergency fund growing.
Your overall goal will be able to afford 6 months of living expenses out of your emergency fund without having to tap into your credit cards.
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Take another 40% and pay down a chunk of your debt. How you do this is up to you. Some people like to pay off the card with the highest balance first. Others like to go after several debts with smaller balances so they feel like they’re getting more done. However you do it, applying 40% of your tax refund to reducing your overall debt load will reduce your money stress, lower the amount of money you’re wasting each month on interest, and help you improve your credit score.
Invest about 15% of your tax refund into Professional Credit Restoration.
Just be careful who you choose. There are lots of underhanded credit repair scammers who are more than happy to take your money and then do nothing to help you with your credit. Or worse, they may engage in illegal practices that could land you in jail.
National Credit Educational Services is a non profit credit education and restoration company recognized by the IRS.
We take your credit, and our reputation, very seriously.
What are the benefits of credit restoration? Your credit score determines your financial possibilities. The better your score, the more opportunities you will have. The interest rates you’ll pay, the loan terms you are offered, what you pay for your utilities and car insurance, even the job you maybe hired for one day, can all be affected by your credit score.
Don’t forget to have some fun! Take all that’s left (about 5%) of your tax return and spend it on anything you want! Go for a weekend getaway, take someone special out to an elegant restaurant, treat your kids to their “Best Day Ever”, or whatever your heart desires.
Getting your financial house in order takes a lot of hard work. It’s important to recognize your efforts and celebrate your wins and successes!
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If you have any questions, please give us a call at 770-952-5168 or contact us online.
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Why NCES Does 3 Rounds of Credit Restoration
Keep Your Eyes on the Prize – A Better Credit Score
Anatomy of Your Credit Score
This information is intended for informational and educational purposes only and not as legal advice. If you have concerns about your credit report, harassment, identity theft, illegal collections activity, garnishments, or property liens, you should consult an attorney who specializes in consumer rights and defense.