5 Super Smart Things to Do with Your Refund Check

BY: - 27 Feb '17 | Money

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Last year the average taxpayer received a federal tax refund of nearly $3200. Having received such a large check in the past, I can fully appreciate the temptations to spend the money on something “fun”. We all work hard for our money so a new toy or vacation should be considered reasonable. Right?

But, if you can resist the temptation to splurge, your IRS “windfall” offers a unique opportunity to significantly bolster your financial situation.

1. Unshackle yourself from debt

Debt is the modern form of slavery, and the average household is drowning in nearly $7,000 of credit card debt. Worst of all, the interest on such debt is money that you’re literally throwing out the window. Eliminating $3,000 of credit card debt with an 18% percent annual interest rate would save you nearly $540 every single year in interest charges. This makes paying off such high interest debt one of the best investments you can make.

2. Take the first step to becoming a millionaire

You can’t become financially independent without planting your financial seeds. As we discussed previously, small sums invested consistently can snowball into large amounts if given enough time. Unfortunately, 56% of Americans have less than $10,000 saved for retirement. Consider investing your refund in an investment vehicle like a Roth IRA every year so that you can retire comfortably, instead of having to live your Golden Years relying on meager social security payments.

3. Provide yourself with the gift of peace of mind

Washing machines break, tires need replacing, and pipes burst. That’s life. But there’s nothing worse than facing a financial emergency without the funds to meet the challenge. That’s why an emergency fund is essential. The sad truth, however, is that 62% of adults have less than $1000 in savings. As an old African proverb advises, “save your money and one day it will save you.” Provide yourself with peace of mind. Use your tax refund to establish your emergency fund.

4. Invest in yourself

There are over 5.5 million job openings in the US. Unfortunately, many of these positions will go unfulfilled due to a widening skills gap. Potential employees simply don’t possess the skills that employers are looking for. You can use this to your advantage by obtaining additional training to gain the skills employers are seeking. Use your refund to enroll in courses at your local community college or gain additional skills through online courses. Consider additional certifications to advance in your current workplace.

The most lucrative investment you can make is the investment in yourself.

5. Save for the down payment of a major purchase.

Too often, we get in trouble by making major purchases without having the appropriate down payment. Making a 20% down payment for a home, for instance, will not only garner you a better interest rate on your mortgage, but it will also prevent you from having to pay costly private mortgage insurance (PMI). PMI is an insurance premium you’re required to pay that protects lenders in case you default on your loan. It is essentially a tax for those without enough money for a sizeable down payment.

Similarly, most experts advise that you follow the 20/4/10 formula when purchasing a car. Your down payment should be at least 20 percent of the purchase price, you should finance for no more than four years, and your total car expenses should take up no more than 10 percent of your gross income.

Using your tax refund to save for the appropriate down payment on a major purchase will save you money in the long run.

There are few times in our lives that we receive a sizeable lump sum of money. Make the most of it by using your refund cash to help further secure your financial future.

BMWK, what do you plan on doing with your tax refund?

About the author

Alonzo Peters wrote 298 articles on this blog.

Alonzo Peters is founder of MochaMoney.com, a personal finance website dedicated to helping Black America achieve financial independence.

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6 Ways Money Smart People Become Wealthy While We Struggle to Make Ends Meet

BY: - 6 Mar '17 | Money

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How is it that some people seem to have truly mastered the money game? They enjoy life, free of financial distress, while the rest of us struggle to make ends meet. Are they born smarter than the rest of us? Do they possess some special money secret? Not necessarily. Money smart people simply do what the rest of us are unwilling to do.

1. Money smart people take charge of their financial situation.

“You have to believe that you are the one who creates your success, that you are the one who creates your mediocrity, and that you are the one creating your struggles around money and success. Consciously or unconsciously, it’s still you.” — T. Harv Eker

Here’s a sobering but simple truth. No one cares about you or your money. They could care less if you’re suffocating in credit card debt. They don’t care if you’re constantly stuck with more month than money. They’re oblivious to the fact that your meager retirement savings doom you to spending your Golden Years eking out a meager existence on social security.

No, they are too interested in seducing you into purchasing the latest iPhone, leasing more car than you can afford, or buying more home than your budget can handle.

We’re alone in a sea of financial predators, and like pigs we make our way gleefully to the financial slaughterhouse. But for many of us, that’s fine because the future isn’t immediate. There is always tomorrow, until there isn’t, and the day of reckoning arrives.

If you don’t take charge of your financial situation, no one else will. You must become your own financial advocate. Motivational speaker Wayne Dyer once said, “Our lives are a sum total of the choices we have made.”

Money smart people understand that financial success is created one decision at a time. Take charge. Become mindful of every spending decision. Become aware of every earning opportunity.

2. Money smart people people become owners

With few exceptions, you’ll never become rich working for someone else. It’s a simple fact. In America, financial independence is achieved through ownership, whether it’s owning your own business, controlling your own side hustle, investing in rental property, or purchasing stocks and bonds.

Unfortunately, in the Black community we’re raised to be consumers rather than owners. We’d rather buy iPhones than purchase Apple stock. We’d rather complain about a problem than build a side-hustle that solves it. We’d rather let others build businesses in our own communities than starting our own.

3. Leverage time and money to become an owner.

1. Stop wasting time. Use it instead to work on becoming an owner. Trade time spent with Facebook, for instance, for time spent developing your side hustle.

2. Create the capital needed for becoming an owner by spending less than you earn. Use the difference to invest in your business/side hustle, purchase investment properties, or buy stocks/bonds.

4. Money smart people invest in themselves.

You are a walking, talking ATM machine. Your skills, experiences, and creativity hold the keys to creating immense wealth for you and your family. Investments in knowledge and learning are the best investments that anyone craving financial success can make.

“An investment in knowledge pays the best interest.” –Benjamin Franklin

Any one of us have the God given ability to learn a skill that will command a higher paying job. Consider attending a local community college, enrolling in an online course, or finding a mentor who will help you obtain premium skills.

Click Here to Download a FREE Copy of the BMWK Generational Wealth Pledge for Black Families!

5. Turn off the television and pick up a book.

African-American households watch more than seven hours of television per day. African-American millionaires, on the other hand, read nearly two books per month. Reading just one book a month in your career field could make you an expert at your company in less than a year, and the expert in your field within three to five years.

6. Take responsibility for your actions.

You can blame your poor financial state of affairs on a host of factors, – lack of education, lack-luster economy, divorce or racism – but in the end, you are responsible for your station in life. Money smart people take responsibility for their actions. They don’t blame external forces but become active participants in building the futures they desire.

BMWK, what are you doing to become financially successful?

About the author

Alonzo Peters wrote 298 articles on this blog.

Alonzo Peters is founder of MochaMoney.com, a personal finance website dedicated to helping Black America achieve financial independence.

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