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Household Budget Tips for Tax Time

It's that time of year again. The holidays are over, the credit card bills have come in and the streets are lined with Lady Liberty figures beckoning you to hand over your paperwork. Tax season is here!

Not feeling celebratory? Combing through your household budget paperwork in order to file your income taxes can certainly be stressful. But there is a light at the end of the tunnel: your refund. This bonus from Uncle Sam can bring welcome relief from some financial burdens.

"Most consumers usually receive a significant tax refund," said Ann Estes, Vice President of Counseling Delivery for ClearPoint Financial Solutions, an NFCC-certified consumer credit counseling service. "This unplanned bonus should be put to good use paying off debt, saving for a big purchase, or tucked away for an emergency."

It's tempting to treat yourself to new clothes, household items or even a quick-getaway. But if your household budget is strained by financial hardship, these tips from consumer credit counseling service professionals will put your tax refund to better use:

• Pay down debt. Using your tax refund to pay off credit card debt or make an extra payment on your auto loan or other high-interest loans will reduce your debt sooner. If you are still struggling with holiday bills, consider using the refund to pay those off. Consumer credit counselors advise paying off smaller, high-interest balances first, which will then free up more funds to put towards larger lower-interest balances.
• Set financial goals. Written goals help you be more conscious of where you spend your money. If your goal is to save for a down payment on a house or car, you'll be less likely to use your tax refund to restock your wardrobe.
• Save for a rainy day. Boost your refund's earning power by putting it into a savings account, CD or retirement fund so that it earns interest. The savings will help if you suddenly face a home or car repair, medical expense or other unexpected bill.
• Keep it all in perspective. Working your way out of debt can seem like a daunting task. Stay focused on your household budget and remember that this process takes months, even years. The reward of being debt-free is worth the wait.
• Enlist the help of a professional. Just as you might work with a tax preparer to file your return, you should consider working with a certified consumer credit counseling service to help get your household budget and finances back on track. The specialists at Consumer Credit Counseling Services can help develop strategies for paying off your debt. CCCS also offers strategies on freeing up cash during the year by avoiding overpaying your monthly tax withholdings. Working with a professional can help educate you in ways to make the most of your hard-earned income.

By using these strategies, you may start to look forward to tax season. Remember, you work hard for your money. Take a moment to plan the best way for it to work hard for you.