With tax refunds and stimulus payments coming in, it may be time to precision tune your budget. Below we outline a few ways to consider making the most of the influx of income.
A good strategy to free up cash could be to think in terms of eliminating payments. Let’s say I have three credit card bills. They are being paid on as follows:
By using the $500 to pay in full the $500 credit card (3), I free up $30 a month. If I paid $500 toward 1 or 2, I would continue to have to make payments on all three accounts.
This method may not save me the most money in interest, but if I then add that $30 to one of the other cards, I’ll be out of debt that much faster and I will pay less in interest. On the other hand, if my finances are tight, I just freed up $30 that I can apply to other needs like gas, groceries, or utilities.
Another strategy for using stimulus or tax refund money is to build or rebuild savings. I may use a $1,400 stimulus to give myself a $1,000 emergency fund, $200 towards a debt and $100 - $200 on needs that I have been avoiding. This may include car maintenance, replacing clothing, or even medical services.
Our counselors are great at helping people precision tune their budgets. Advice and options are always based on the goals of our clients and just like the budgets we are working on, everything is customized to fit your financial needs. Call today - 888-282-5811!