Getting money back from the IRS is a silver lining to paying taxes, but why invest a tax refund in your home instead of, say, a weekend getaway? Because your home is probably your biggest asset, so it pays to take care of it — literally. Even modest investments, like a new washing machine, can yield surprisingly big returns.
The average tax refund changes from year to year, but lately it’s totaled around $2,700. That’s a tidy windfall. Not everyone is so lucky, of course, but even if you only get back a portion of that amount, there are many great ways to invest a tax refund in your home. Consider these four projects that cost around $1,000.
1. It All Comes Out in the Wash
It might not sound sexy, but equipping your laundry room with a new washing machine will pay off immediately on your utility bills. Today’s high-efficiency washers use less water per load than standard top-loaders, so you save on your water and water-heating bills. Generally speaking, you can save $60 annually with an Energy Star-certified machine compared with a machine that just meets Department of Energy standards. Machines that carry Energy Star’s “most-efficient” seal can slash your yearly power bills by up to $106.
As to cost, a high-efficiency top-loader costs between $600 and $1,000. A stylish and even more efficient alternative is a front-loading washer. Prices for front-loaders start at about $700.
2. Make Your Mortgage Disappear
A mortgage, especially one that spans three decades, can seem insurmountable. Yet it’s possible to use small sums of money over time to make a big dent in the principal. The net result is saving thousands of dollars on interest and shortening the time you spend paying off the home loan.
Let’s say you take out a $250,000 mortgage. The rate is fixed for 30 years at 6%. Your monthly payment would be $1,500. Over 30 years, you’d pay a total of $540,000. But if you pay an extra $100 per month — $1,200 per year — you’d pay off the mortgage four years early and save $52,000 in interest. Use a mortgage calculator to run your own numbers.
3. Where There’s No Smoke, There’s Fire
Do you dream of curling up in front of a roaring fire, yet your home lacks that one essential ingredient—namely, a fireplace? Don’t fret. Your dream can become reality at a surprisingly affordable price. Ventless fireplaces offer the ambiance of the real thing without the need for a chimney or flue to vent smoke outdoors.
But ventless fireplaces exhaust small amounts of combustion gases inside the home. So if you’re going to go ventless, consider these options:
- An electric fireplace insert, which just needs to be plugged in. Inserts range from about $500 to $1,500, including install.
- An alcohol-gel fireplace (faux-log inserts, $200 to $400; a case of 16 to 24 cans of gel fuel, around $70). Although they do emit a small amount of carbon dioxide, we prefer them to ventless ethanol fireplaces, which can spew carbon dioxide, nitrogen dioxide, benzene,and formaldehyde, according to study cited by the EPA.
4. You Take the High Road, I’ll Take the Slow Road
Don’t let your property line limit your spending plans. Some small investments on your part can benefit an entire neighborhood, which not only improves livability but can also increase property values. Take, for example, the speed hump, a raised mound of pavement on a residential street designed to slow lead-footed drivers.
One traffic-calming study found that 12-foot speed humps reduced average speeds by 22% and the average number of traffic accidents by 11%. You’ll need to work with your local government to have a speed hump installed, but offering to foot the bill can grease the wheels of bureaucracy. Basic speed humps start at about $1,000 apiece. Your share will be less if you convince neighbors to chip in.