The Refund Reality Check
The average tax refund is around $3,000. For most people, that money disappears within a few weeks. A new TV here, some clothes there, maybe a nice dinner or two. Before you know it, it's gone and you can't really remember where it went.
There's nothing inherently wrong with spending your refund. It's your money. But what if you thought about it differently? What if instead of buying things, you bought freedom?
That $3,000 applied to high-interest credit card debt could save you $500 or more in interest over the next year. It could move your debt-free date up by months. It could be the difference between stress and breathing room.
The Math of Freedom
Let's say you have $10,000 in credit card debt at 22% APR. You're paying $200 a month. Without the refund, you're looking at about 6 years to pay it off, paying over $4,000 in interest.
Drop that $3,000 refund on the balance? Now you're done in about 3.5 years, and you save over $2,000 in interest. You just bought yourself two and a half years of freedom with one decision.
Not All or Nothing
You don't have to be a monk about it. A balanced approach might look like this:
- 50-60% toward debt or savings
- 20-30% for something you actually want
- 10-20% for experiences or fun
This way you get the psychological win of treating yourself AND the long-term win of making real progress on your financial goals. It's not either/or.
See the Impact
Use Spendify's what-if calculator to see exactly what your refund could do. Enter your current debt, add the lump sum, and watch your timeline change. Sometimes seeing the actual numbers makes the decision obvious.
.avif)
