Jill Schlesinger's Tax Refund Tips: Emergency Funds, Debt, and Retirement

Rethinking Tax Refunds

• 💡 Receiving a tax refund means you've given the IRS an interest-free loan throughout the year.
• 🛠️ To avoid this next year, use the IRS.gov withholding tool to adjust your withholding with your employer or reduce quarterly tax payments if self-employed.

Prioritizing Your Refund

• 🎯 The first priority is to build an emergency reserve fund to cover 6 to 12 months of living expenses, or 1 to 2 years if retired.
• 💳 Next, focus on reducing high-interest debt, such as credit card balances.
• 📈 Finally, fund retirement plans to the best of your ability, especially to capture employer matches.

IRA Options

• 🏦 If you don't have a workplace retirement plan, consider opening a traditional or Roth IRA.

Mortgage Paydown Strategy

• ⚠️ Paying down a mortgage early is not always the best option, especially if your mortgage interest rate is under 4%.
• 📈 Investing the money instead could yield higher long-term returns.
• 💰 Keeping cash accessible can provide stability and be necessary for future health and medical needs.