To spend, or not to spend, your Tax Return?

To spend, or not to spend, your Tax Return?

March 15, 2011

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It’s about this time of year that grandeur and lavish presents seep to the forefront of our minds.  Thoughts of that flat screen TV, maybe a boat for entertainment in the summer, or a motorcycle to ride your days away.  It’s not Christmas, but it can feel like it with the sum of money we look forward to – the tax return.  There are different uses for your tax return (if you’re getting one):

  1. Save it.  Remember that it’s your hard earned money and you can put it in a savings account.  It doesn’t have to be spent right away.  For some of us, we have never had a savings account, so a little extra cash lying around could be a plus.
  2. Create an Emergency Fund.  As many of us already know…you never know what will happen in our future.  Many investors suggest an emergency fund of 3 to 6 months of take home pay.  Put it in a money market and reap the rewards of the interest rate attached to that account.
  3. Pay off your high interest bearing credit cards or overdue bills.  Try to wipe your slate clean for the rest of the year.
  4. Save for college.  It’s not just for kids leaving high school anymore.  For those who have lost a job, college is an option for new career opportunities or just to further your degree.
  5. Last but not least, if you are caught up on your bills, credit cards, and have money in the bank…set your sights on that vacation or flat screen TV.

Be smart about that hard earned money!