If you receive a sizable 2017 income tax refund, what would you do with it?
A sizable amount might start at $2,000 to $5,000 and increase from there. Stop a moment and think about that question, especially since income tax refunds happen every year but winning the lottery could take years.
When your tax refund does come, it is a good idea to have a plan for what you would like to do with it. This way when the money arrives you can act rationally. Your annual income tax refund is a great opportunity that you don’t want to waste. There are three to four basic choices on how you use your refund.
Use it to pay bills
The option you choose depends on your circumstances. We strongly recommend you consider using your tax refund as part of your money saving equation towards buying your first home.
Money Saving Equation
(refund + savings = down payment)
Tax season is a good time to strategize for saving to buy a home. Buying your first home is a huge step. Be not afraid! Breaking the home buying process into smaller steps helps to make it easier to reach your goal.
Step 1: Start saving extra income like your 2016 tax refund, cost of living increases and merit raises.
Step 2: Do not add new bills such as a new car, new furniture and other big ticket items like appliances.
Step 3: Talk to a HUD-Certified housing counselor about your credit score. They will let you know if you need to take a little bit of your tax return to bring credit accounts current. You may not need to use all of your tax return to pay off credit cards and other bills. Save as much of your tax refund as possible for your down payment.
Step 4: Hang onto your job and keep it steady. Banks look for consistency in employment. They want to know that buyers are not moving from one job to another frequently.
Why not to let Uncle Sam help you start your savings plan. Save your income tax refund and keep saving until you are closer to buying a home of your own in 2017.