T-minus 38 days and counting until the IRS deadline for filing Tax Returns.

With the various credits and deductions related to housing, children, and retirement contributions, most people we know are fortunate enough to receive a sizable return every year. I'm always curious to see where people spend their tax refund.

Does the money go to pay down debt, fund the next family vacation, or finance the bathroom


I always encourage clients, friends, and family to make an extra mortgage payment once that refund arrives.  I'll be the first to admit it doesn't seem very glamorous or exciting to make an extra mortgage payment.   Why would anyone do that when they could spend the week on a tropical beach in an exotic locale?  There's no instant gratification in making an extra mortgage payment, no box that arrives with Amazon Prime tape, and no girls weekend in the City.

You make the payment and then move on.  The reward may not come until much later, but I promise it will be sweet.  You see, making ONE extra payment a year will save you about FOUR+ years in mortgage payments.

Let's break down the basic math.

Assume you have a $500,000 30 year mortgage with a 4.0% interest rate. Your payment is about $2,387 a month. Make one extra payment with your tax refund and you will reduce your mortgage by 4 years, 2 months and save over $58,000 in interest.

Now what would you do with an extra 4 years of NO mortgage payments?