Did you know that the average Aussie gets a tax refund of $2,574?
Even better, this year the ‘Lamington’ (Low And Middle Income Offset) of up to $1,080 kicks in.
(The sweet spot for getting the full amount is earning between $48,000 to $90,000.
So, how will you spend a grand in the hand from the taxman?
It’s enough to buy a cheap TV from Gerry Harvey, but not enough dough to change your life, right?
Today I’ve come up with three ways you can spend your tax refund that will change your life.
Go, Barefoot, Go!
Don’t Pay Off Your Credit Cards
Okay, so this is counterintuitive, but if you have credit card debt don’t use your refund to pay it off.
Here’s the logic: most people have been trained to see their credit card as their ‘emergency back-up money’.
Yet, if you’re in trouble, high-interest-rate debt won’t help, it’ll just make everything worse.
So here’s what to do instead: save your refund into a savings account (we Barefooters call it ‘Mojo’). Cash is the ultimate emergency back-up. Then, with your Mojo behind you, you can go ahead and confidently cut up your credit card and start paying that sucker (or suckers) off.
Escaping the credit card merry-go-round of misery will change your life.
Get a Lawyer, Son
There are only three certainties in life: death and taxes (and George Colombaris. Actually there’s just two).
So with your tax return why not protect your loved ones from the greedy tax man, after your untimely demise.
Sitting down with an estate planning lawyer and drawing up a will or, preferably a testamentary trust (plus enduring power of attorney and medical power of attorney), will help you navigate the ‘defacto death taxes’: capital gains tax, stamp duty, income tax, and (for adult non-dependent children) a 32% tax slug on your super.
Getting this sorted is the final way you say ‘I love you’ to the people you love the most.
Get a Bit on the Side
If you’ve got an idea of starting a side business, use your tax refund money to kick-start it once and for all.
These days you don’t need to put in much more than a couple of grand to get started: a basic website, some Facebook ads to attract your first paying customers. See if you can earn your money back, quickly.
A final idea, and a plug so blatant that Gerry Harvey would be proud: days ago I released the updated 2019 edition of the Barefoot Investor: The Only Money Guide You’ll Ever Need. It’s in stores now, and to date 1.6 million people have used it to change their financial lives!
Print ebook and audio available where good books are sold.
Tread Your Own Path!