There’s a better place for your refund. Put it in your Super.It is estimated that the average tax refund in Australia this year will be $2,017. And most people will have it spent long before it lands in their bank account.
One of the most commonly recommended strategies at this time of the year is to use your refund to reduce your high interest credit card debt. Anyone that thinks that putting your tax refund against your credit card debt will save you, doesn’t understand the nature of us humans.
Sure, it’ll reduce your payments for a little while but in no time at all you’ll find a reason to draw your cards back up to their limits. Believe me when I say most people will have their cards back at their previous levels within 3 months.
Do this not that
If you were a purely logical animal you wouldn’t have needed the credit card to buy stuff anyway. You would have had plenty of money in a savings account to use. But seeing as most of aren’t like that we need a strategy that truely helps us and takes into account our weaknesses.
The best way to truely take advantage of your tax refund would be to put it in your Super and forget about it but let’s face it, very few people are likely to do that.
And that’s because we are all human and it’s hard to put money away for a time 20 years or more in the future when the first 3 things that come out of your salary each pay are debt payments.
The 50/50 Strategy
So here’s a way, you can help yourself for the future and ease your mind a little in the here and now also.
First, contact your Super provider and ask if they provide a BPay facility to make contributions. If they don’t, then find someone new but most do so get your Biller code and account details and immediately deposit 50% of your refund, on the same day it lands in your bank account.
Secondly, instead of depositing the rest against that big pesky credit card, use it to pay off one of those small niggling debts that’s been annoying you.
The pay off for your self confidence is massive as you get to remove one of the monkeys off your back. If you have some left after that, then pay it off a debt that you can’t withdraw from such as a personal loan.
This is a simple strategy that will have big impacts, not just on your debts but also your peace of mind. And that my friends, is Priceless.
Got Questions? Ask them in the comments section.