Tax Refund Decisions

Are you getting a tax refund back this year? Do you have any plans for it? Are you pretty savy with your money or do you tend spend it quickly?  A tax refund isn't a gift from the government it's really your money. Money that you earned and over-paid in taxes through out the year. Uncle Sam has been holding on to it and repays you without interest.

It's your money but you might consider:

Using the tax refund to pay to any credit card debt that you might owe or use it towards any student loans that are outstanding. This helps you eleminate or reduce any interest rate payments.

If you don't have an adequate savings account already eastablised or need to start one, the tax refund can come in handy. Most financial advisors advise at least 3 month of expenses be set aside in a liquid savings account.

If your financial situation is more stable, without a lot of outstanding debt and an established liquid savings account, then using the refund to start or add to an existing Traditional or Roth Ira account might be an idea that can have a long term positive effect on your ability to retire one day.

If your tax refund feels like "found money" to you and you’re being smart about it, there are ways that you can put it to work and improve your financial situation. You can treat yourself, but don’t just spend it all without a thought of your future.

The bottom line is, it's your money and there are many potential uses of it, please choose wisely.