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There are plenty of things you could do with your tax return, but what should you be doing with it? While it is tempting to blow it all on a new TV, putting your tax money toward your debts can help you pay off your loans faster and save thousands in interest. Debt Rescue talked to The Sunday Mail about Australians needing to be responsible with their tax return.
Tax return time has a tendency to create a frenzy akin to the Boxing Day sales with people splurging their refunds like they were not spending real money. But if you are among the estimated 70 per cent of Australian households affected by some form of debt stress, why not resist the urge to buy up during the "end of financial year sales" and instead put your tax return to better use?
"When the return arrives, take five minutes, a deep breath, be a grown-up for a bit and have a bit of a think tank."
Debt Rescue's Tips for Tax Time
- Consider where the funds could provide the greatest impact: Reduce the mortgage. Boring, yes, but think of the years you will save and the tens of thousands in interest (that's a lot of plasma TV5 in the long run).
- Eliminate expensive credit card debt. Again, not very exciting, but neither is 29 per cent interest.
- Invest funds for the future. Kids' education is expensive; get a head start, get a bigger deposit on your first house, set up an account where you park your tax refund every year and let it just sit and compound.
- Be responsible: Get a professional to do your return.
- Remember. tens of thousands of returns are rejected every year (delaying your elusive return) and just as many are audited.
- Be prepared, you may have a tax hill coming if your employment is changing.
- Be honest, government agencies may share your data.
Anyone experiencing problems with debt can contact Debt Rescue toll free on 1800 003 328.
