What to Do With Your $950 Tax Bonus Payment?
Depending on how the negotiations go in the Senate regarding the latest stimulus package developed by the federal government, there is a chance that many will be receiving a $950 payment some time in April. So what should you be doing with that money?My response may not be what the government is hoping to hear but my first reaction is to say save the money.With interest rates falling by the month the next logical question is where should you put the saved money? Here are some ideas the merits of which will depend on your personal situation: Put it towards that non tax deductible debt, the higher interest rate options first – Eg credit cards, personal loans etc Put it towards your mortgage – if you have an offset account even better, this will reduce interest payments but keep the cash acc afni essible. The interest cost reduction from putting it towards your loan will definitely out weigh any interest you would get from saving especially if you are stuck in a fixed interest loan. First Home Savers could put it towards a First Home Saver Account and by doing so get a 17% extra kickstart from the government – an extra $161.50. The money goes into a 15% tax on income earnings within the account which could also be beneficial for some but one word of warning, the returns on the savings will not be flash going forward as most of the options offered are for the funds to sit in cash. Add the $950 to your investment portfolio – unless Australian share dividends are cut by 60% going forward the return you are likely to get from the dividend payments from shares should beat cash returns.