3 Reasons You Should Use Your Tax Refund To Pay Down Debts

Are you expecting a significant tax refund this year? You get a tax refund because the taxes withheld are higher than what you actually owe. Tax credits, expenses claimed, and RRSP contributions are all some of the ways you can reduce the taxes you owe and increase your return. A tax refund is a boon to many Canadians, but it’s important to remember that a tax refund is money you’ve already earned and the government owes you, not a sudden windfall. That mindset can affect what you do with your tax refund. The smartest thing you can do with a tax return is pay down debts.

Tax refund

#1 You Save More Money on Interest Payments

The best reason to use a tax refund to pay your debts is that it saves you money in the long run. If you’re carrying balances on your credit cards or student loans, the interest costs you more money every month. The more you pay down, the smaller the interest charges. Spending a dollar on your debts today will save you more money in the long run.

#2 Less Debt Means More Spending Money

Lower interest payments and lower debt also means you have more spending money in the long run. Getting a tax refund will make you feel like you suddenly have money to treat yourself, but by using that on debt today, you will free up more spending every month. When you become debt free altogether, you will be surprised how much extra income you find you have.

#3 Bankruptcy Is Always a Surprise

Bankruptcy trustees (or as they are now known, Licensed Insolvency Trustees) David Sklar & Associates warns that responsible spending isn’t always enough. Bankruptcy almost always creeps up on people. The most common reasons for insolvency include job loss, sickness or personal injury, divorce, and losing a business. Poor budgeting and excessive credit card use aren’t often so much the causes of bankruptcy as symptoms of a larger crisis such as income loss or personal injury. There are cases where overspending is the source of insolvency, but if you think of yourself as a responsible spender, do yourself a favor and eliminate credit card debt now. When you have extra money, many bankruptcy trustees like David Sklar & Associates will encourage you to eliminate high-interest debt first.

For some, it may be too late to avoid insolvency. When your debts are too high to pay off, you may need help dealing with bankruptcy from a bankruptcy trustee. Only a bankruptcy trustee can file for a bankruptcy, and they will let you know about alternatives including consumer proposals. If you are already in bankruptcy, your tax refund will be sent to your bankruptcy trustee. These are then available to creditors. However, in a consumer proposal, you agree to pay a fixed amount every month back to your creditors, unaffected by any additional income you receive. A bankruptcy trustee like David Sklar & Associates can further explain this process to you. If you’re facing insolvency or high debt, get help from a team with your best interests in mind. A bankruptcy trustee can explain all there is to know about insolvency.

The Future of Bitcoin Explained

BitcoinBitcoin is the first among the cryptocurrencies to have hit the market. For the same reason, it rules the digital money markets across the world. Though it hit the markets way back in 2008, it gained popularity in the markets only in 2013, with a sudden leap in its value. Ever since then, the value has kept in increasing and more and more people have come forth interested in making bitcoin investments. As of now, Bitcoins have earned a total profit in billions across the globe. Finance experts predict that the growth will only explode in the coming years and that bitcoins may be the future of our economies.

Having said that, it has its risks too. It is a decentralised currency which allows peer to peer transactions without any third party involvement. You often wouldn’t  know who you are making these transactions with.  Since these are encrypted digital money, the chances of getting hacked are also present . A single virus attack on the computer may be enough cause a loss of millions in one go.

These risks, and certain incidents where investors where investors got washed out of their money, have forced governments to research on how to bring some control into the digital economy. Nations like Singapore have already banned trade in Bitcoins or any of the alt coins till a centralized system can be established.

Still, people are eager to invest in Bitcoins. Are they going to take over the economy as predicted? Let’s examine the opinions of various experts before we come to a conclusion.

The Chinese markets have a very important role in deciding the value of Bitcoins. In 2017, the value of these cryptocurrencies went high as the Chinese population tried to overcome the crunch of Yuan. The market capital of BTC hit $1140 per coin- then an all-time high.

This gives another reason to believe in the future of Bitcoins. They are liquefiable in almost any Fiat currency in the world. Also, as long the trade in Bitcoins are not restricted by the nations, you can exchange them with the currency which has the greatest value at the given pint of time, be it Dollars, Euros or Pounds.

Bitcoins are like gold, an investment but without the storage issue of the former physical asset. Since these are stored in online ledgers under layers of encryption, they are as safe as anything. Only the best hackers in the world can decrypt those codes. The cases of hacking are comparatively low though not unheard of.

Tim Draper, the Finance expert and billionaire says that –

“In five years, if you try to use fiat currency, they will laugh at you. Bitcoin and other cryptocurrencies will be so relevant… there will be no reason to have the fiat currencies.”

He opines that the value of cryptocurrencies will almost double by 2025 and that they make an ideal investment for future. If we are to believe people like him, in the near future, the only money we will be seeing, will be the digital ones.