Did you get a holiday bonus from your employer? Or maybe you have a tax refund coming. If so, do you have any of it left, have you already got it spent in your mind, or are you thoughtfully considering how you can best utilize this surprise resource? Annual bonus payments and tax refunds are nice windfalls, which can be used to create more stability in your life. While it is fun to treat such income as “mad money” to be spent on frivolous endeavors, it may be more effective to use it to create more for your long run. Here are some max tax return tips.
The Best Uses
Paying down a home mortgage is one of the best uses of extra cash. The less principal on which interest is calculated, the more money you will keep for yourself in the long run. Another benefit to making a principal payment is that if it brings the remaining principal to less than 80% of the appraised value of your home, then private mortgage insurance can be dropped, saving you even more money.
Contributing to a retirement account is another excellent use of extra money, if your employer matches your contribution.
If not, consider the possibility of investing your bonus or tax refund into starting your own side business. Here’s a great article about the Side Hustle and how it could help you.
Other Good Uses
Home improvement needs are common for most home owners. Keeping up the condition and value of your home are important long term goals. Letting things go too long typically increases the ultimate cost of repairs. Dealing with them early can pay dividends.
Another good use of bonus funds is to invest in an estate plan if you don’t have one already. Over 50% of Americans between ages 55 and 64 don’t have a will. And 69% of parents have never named legal guardians for their kids. Of the 31% who have, most have made one of 6 common mistakes that means their kids are at risk. Are you part of this group?
Dying without a will, let alone a comprehensive estate plan and Kids Protection Plan® for your kids, creates complications for your heirs and can leave your family in Court and/or conflict. While you may not relish the idea of investing your bonus or tax refund in an estate plan, the cost to you now would be much less than the cost to your loved one’s later.
A Note from the Attorney, Stan Pierchoski:
The practice of law is a second career for me. After obtaining Master of Science degrees in both Nuclear and Mechanical Engineering, I worked in the Nuclear Power Industry for 15 years. Always having an interest in law, I attended and graduated from law school and founded the Pierchoski Law Firm in 2002 in Pulaski, TN. For several years I practiced as a criminal defense, trial attorney. After my parents passed I became interested in Trust and Estate Law and felt a strong calling to change my practice to the Estate Planning area.
For years I have been exclusively doing trust writing and wealth planning and have become proficient at it. Over the last several years my practice has evolved to serve all age groups including elders and Medicaid Planning. I am always open to your questions and am more than happy to chat with you about your concerns so give me a call or stop by my office. You’ll be glad you did!