January 27, 2019 | Tax Laws
From a NY Tax Lawyer- How not to spend you tax refund
Today our NY Tax Lawyers want to share with you the 9 worst ways that you can spend your tax refund this year. Here they are:
- Using the tax refund as a down payment on a new car. While initially fun and exciting, upgrading your ride will increase your overall monthly expenses (insurance, car payments, maintenance/repair costs) which is the exact opposite and the type of asset that builds your wealth.
- Gambling using your tax refund money might be very tempting since it is ‘found money’ not money from your existing budget, but can be an extremely poor choice says our NY Tax Lawyer. Sure it might be fun and you will not have lost money that you cannot afford lose, but this is a waste of a gift from the taxman. In addition, you might find that you end up spending more money while gambling because you are spending money on food, drinks, etc. So you have effectively made yourself poorer than you were before you got your tax refund check.
- Buy new clothes when you already have a closet that is bursting at the seams.
- Deciding to invest the money in high-risk investments, such as gold, silver, and commodities.
- Buy the latest iPhone, iPad, tech gadget that replaces the perfectly good working one you already own. What is the big difference really between an iPhone 4 and an iPhone 5, really?
- Buying a new boat or ATV. Sure it is fun initially, but then you have to maintain it and put more money into it to use it. Not a smart financial move.
- Sign a new lease for a home upgrade. Sure you are renting an average apartment now, but why use your tax refund to pay the first month’s rent and damage deposit on a new place? You will find out very soon that if you couldn’t afford it before, you won’t be able to now. And you will be on the road to complete financial devastation – trust me, I know from first-hand experience. When the money runs dry, you will be worse off. Ever felt the joy of moving into a new place and moving out again after 1 month because you ran out of money? I have, and it sucks. Don’t do it.
- Buying anything before clearing up overdue bills and accounts. Now is your chance to get caught up and fix any stupid financial mistakes you’ve made over the last year. Bring your head above water. You will be glad you did.
Avoid these pitfalls and spend your tax return wisely. And remember, it is ok to spend a part of your tax return on something fun. Just make sure you can afford it.