What to Do With Your Tax Refund?

in Canadian, CCPA, CRA, Refunds

Let’s Go Crazy!

I am assuming that you will be receiving a tax refund this year (if you are not keep reading maybe you can get some ideas for next year). I have been reading a bunch of posts from various financial bloggers about what are the worst things to do with your tax refunds, and I must admit I have been berating folks about mis-spending money lately as well ,so let me first preface this post the only serious misgivings I would have with your Tax Refund would be:

  1. You shouldn’t really have one, next year try to owe nothing, that way you already had the money to enjoy
  2. You take your refund money and do something illegal with it, or worse you do something that puts you farther into debt
  3. You get a quick refund from some place like Money Bamboozlers (or whatever)

With point (2) I mean using your refund as a down payment on a car or have it pay for only a small part of a ludicrously expensive vacation!  As for point (3), you know my opinion of the Pay Day Loan world and I lump the “quick rebate” firms in there too.

Don’t Go Crazy!

Now that you have this tidy pile of cash, what can you do with it?

Money, Coins, Pennies

Money, Money, Money!!!!

  • You could use it on some of the projects on your Honkin Big Summer To Do List, or better still hire someone to do some of the things you want done.
  • Repair the brakes on your car (no you shouldn’t be waiting for a rebate cheque if you are driving the car).
  • Invest it in an RRSP or your TFSA? That is a good idea, and if you put it in your RRSP, you are setting up for another rebate next year (or you could lower your taxes at the source as well, if you fill in the right forms, and get a receipt right away).
  • Pay down debt, is (in my opinion) the best choice, since that is an excellent way to get rid of debt (use found money to pay down debt). If you have debt, think about using this wind fall to get you out of the debt trap.

What are you planning to do with your tax rebate, or were you smart enough to not owe anything, or be owed anything?

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{ 7 comments }

{ 7 comments… add one }
  • Scott Messner April 16, 2011, 5:27 PM

    Build an emergency fund between $1,000 and $3,000. Pay off debt if you already have an emergency fund.

    Reply
  • The Taminator April 14, 2011, 12:55 PM

    I received a whopping $96.40. Deduct from that the $18.02 I paid for the tax software and I netted $73.38. An amount that insignificant I just left in my chequing account since I have no debt. Then I spent time this morning figuring out, for the most part, what my taxes might be next year. The numbers are all plugged into an Xcel spreadsheet so as I get overtime at work I can adjust it and if need be, increase my RRSP contribution (my TFSA is already maxed out this year).

    Reply
    • bigcajunman April 14, 2011, 1:04 PM

      So you have it well in hand, oh and send me $74 if you don’t want it…

      Reply
  • Dan April 14, 2011, 9:36 AM

    Agreed that paying down debt is the best bet. That, or your emergency fund.

    That being said, it’s sometimes hard to resist the temptation of some new patio furniture. Resist the urge and ask yourself “Do I REALLY need this?”

    Reply
    • bigcajunman April 14, 2011, 9:45 AM

      C’mon you really DO need that Nuclear Powered Latte/Espresso maker don’t you!??!

      Reply
  • Sustainable PF April 14, 2011, 7:25 AM

    We used ours to replace my stolen laptop and to buy a LED monitor. We then cancelled our cable and phone bill. Bought a magicjack, stream TV from the net via legal means. Got rid of Bell for a cheaper option with more download space. Spent about $600 and am now saving $122 per month vs using traditional big company phone/tv/internet. 5 months and the hardware is paid off.

    Reply

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