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Hooray for taxes!
Few things are more fun than sifting through confusing forms and then finally turning over a big fat check to Uncle Sam, are we right? Is our enthusiasm not making you feel better about taxes?
Ok, different strategy: if you were one of the lucky ones who recently found out that you’re due for a refund, you can put that money to fantastic use around the house!
Here are five ways to intelligently invest your tax refund back into your home.
Bonus: Some of these purchases will help you out when tax time rolls around next year!
Beef up your house fund.
A lot of experts suggest putting your refund into an “emergency fund” (money you set aside for unexpected issues like medical expenses or losing your job).
This is good advice, but we also recommend reserving some cash exclusively for your home. That way, you’ll be able to handle both unexpected problems (like a broken refrigerator) and expensive, but necessary improvements (like a new roof).
Experts recommend saving 1-3 percent of your home’s initial price each year, so use your refund to get a chunk of that squared away! For more details, read: Start a House Fund.
Take an extra bite out of your mortgage.
If you have a mortgage, there are two big advantages to paying it down quickly – you’ll pay less interest, and it will allow you to start saving for other major expenses sooner (looking at you, college).
Check with your bank to see what kind of early payment options they have available. Most banks will allow you to send additional funds along with your regular payments, and your tax refund is perfect for this!
Purchase a low-flow appliance.
If your refund was on the petite side this year, don’t despair – you can still help your home in a big way!
For example, purchasing a low-flow showerhead can reduce your water usage by 25-60 percent. You’ll also save energy (and money) because your water heater won’t have to work as hard.
Low-flow showerheads are pretty affordable, so this is a great use for a small refund.
Grab some flood insurance.
Not concerned about flood damage?
Get this: Around 20 percent of flood insurance claims occur in moderate-to-low-risk zones. Anywhere it rains, it can flood, so it’s best to be prepared.
The average flood-insurance policy costs about $600 a year, so if Uncle Sam was kind this year, it’s a great option. To get an estimate for the cost of flood insurance in your area, visit FloodSmart.gov.
Install a storm door.
Storm doors typically cost $100-$300 and add an extra layer of insulation, which reduces your home’s heat loss and saves you money. (The EPA estimates that 11 percent of a typical home’s heat loss escapes through doors and windows, so that’s nothing to sneeze at.)
Plus, you’ll be eligible for a tax credit that covers 10 percent of the cost of your materials (up to $500).
Note: Storm doors are a great investment if you have an older front door that’s still in good condition, but homes with newer, better-insulated doors won’t see as much of a benefit.