What to do With Your Tax Refund

by Justin Weinger on April 11, 2007

For a lot of us, tax season really isn’t that bad thanks to the fact Uncle Sam is going to cut us a nice fat check for all of the taxes we overpaid throughout the year.  Whether it’s $100 or $10,000, it’s always nice to get that “unexpected” money.

So, what should you do with your Federal Windfall?  Blow it on a trip to Vegas?  Buy that 72 inch TV you’ve had your eye on?  Pimp out your 1987 Toyota Corolla?

I’ve got a better idea.  How about you put your money towards something useful that will actually help your personal finances?  Here’s a list of things you might want to consider putting your tax refund towards instead of splurging:

  • Pay down any debt you might have.  Because you probably weren’t planning on having to live off of Uncle Sam’s refund check, it’s not a bad idea to go ahead and use that money to pay down your debt.  Whether you’re applying the money towards credit cards, student loans or a mortgage, putting this extra money towards reducing your debt is a pretty good idea.
  • Start an IRA.  Why not use the money you’re getting back from the government to help fund your retirement by putting some of the cash into an IRA – or even better, a Roth IRA?
  • Put the money towards home improvements.  Because your home is more than likely the largest investment you’ll ever make, it’s probably a good idea to keep it up to date and in good condition.  If you’ve already got that taken care of, why not add things that will increase your home’s value, like a deck or an extra bathroom?
  • Squirrel the money away for a rainy day.  If you don’t have several months worth of salary in reserve, putting your tax refund towards your emergency fund is a pretty smart idea.

Granted, this list isn’t all inclusive, but you get the point; take the money, make it work for you and improve your personal finances.  Even if it’s just a small refund it can still make a big difference in the long run.

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{ 1 comment }

Saving Simply April 12, 2007 at 7:53 am

In fact, if you can avoid getting a refund to begin with, you’ll get YOUR money sooner, and start earning a return on it sooner.

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