In tough economic times, it's often difficult to find a way to afford a summer get-away. Many folks are skipping the usual week at the beach and instead are choosing to stay home and enjoy local activities. While this can be a lot of fun, most people don't realize that with some astute paycheck management and a little discipline, anyone that gets a tax refund might just have enough extra cash to afford the luxury of putting their toes in the sand this summer.
For those that get money back from the IRS after filing their tax returns, it may be as simple as taking that refund check and putting it in the highest yielding savings account they can find, then not touching it till it's time to plan a summer vacation. Another option is a short term CD. While this might be the easiest way to handle it, other options can generate even more cash.
If you do get a refund every year, you might want to think about adjusting the allowances on your W-4 form. The free paycheck calculators at PaycheckCity can help you figure this out. Your tax liability and what you have withheld each year should closely match. If these two amounts aren't close, an adjustment will enable you to have more money in each paycheck, all year long. Opening the highest yielding savings account, and employing a little discipline to deposit this 'extra' cash every paycheck will not only afford you a nice summer vacation, it could also give you even more to spend. The added bonus here is that you have a savings program in place for not only summer fun, but also an emergency fund.
An additional spin on this idea, for those that are truly disciplined, is to use a credit card that gives you points or cash back. The idea here is that, again, you start by putting the extra cash into that highest yielding savings account all year. Then you use a credit card to charge all the expenses for the vacation. Do not spend more than you have saved, and be sure to pay the credit card bill in full from the savings account. This means that not only are you enjoying the additional cash from the interest rate on the savings account, but you are also getting cash back from all the charges you put on your credit card. And that can add up to some seriously sandy toes!
These free resources should not be taken as tax or legal advice. Content provided is intended as general information. Tax regulations and laws change and the impact of laws can vary. Consult a tax advisor, CPA or lawyer for guidance on your specific situation.