We are over half way through the year, we’ve just survived yet another federal election, and are probably panicking about our tax returns. But what if this time of year could give you $2,000?

What would you use it for? Debt help? Holiday? Bills?

I know most of you may think I am joking, but the average tax refund is around $2,112. In addition to this, from the survey done below, only 16% of us don’t receive a tax refund.

But what are we doing with this money? Check out the below moneysmart infographic to find out.

spend-tax-return - debt help

spend-tax-return2

 

I suspect the people who answered the survey are very good with their money, I would speculate much better than the average Australian. Well, at least, much better than me. So, what would you do with a $2,000 return? Spend it? Save it? Use it to pay down debt?

We all know the answer –  Pay down your debt!

If you have this extra money, and of course don’t need it to pay for an unexpected expense, think of your return as a forced savings plan which you can use to make a lump sum payment on one of your debts.

Get debt help and make money

Let’s assume you have $8,000 on a personal loan, with a 14.5% interest rate over 5 years.

You do a lump sum payment of $2,000 on your loan.

You save $1,475.98 in interest and cut your loan period by 4 months.

That $2,000 has actually grown into $3,475.98!

You using your tax refund wisely has actually made you more money. It will allow you to get debt help, and will allow you to be debt free sooner. It is not the fun option, but it is the sensible option which will help you in the long run.

We’ve previously written about surviving tax time and surviving the tax bill blowout, so make sure to check out our previous blogs for helpful hints and tips.

 

Elise Bentley
Brand & Communications Manager

Elise is passionate about finance, and is on a mission to explore and share different tactics for tackling the everyday financial challenges in realistic and achievable ways. With a background in communications, digital marketing, and public relations, Elise uses her skills to generate new ideas and content to help make finance fun.