| As you're waiting for your income tax refund to arrive, | | | | vehicle, you may be able to make a lump sum addition |
| you may be making all sorts of plans for how to | | | | without tax implications. You can find tables online to |
| spend it. Depending on the refund amount, you could | | | | determine whether some of that tax refund could |
| be dreaming of a vacation or of replacing your entire | | | | benefit your retirement. |
| wardrobe. Before you sign away your tax check, here | | | | 4. SAVE! How's your Personal Savings Rate? If you're |
| are five practical tips for how to best use your income | | | | like many Americans, you're trying to save more right |
| tax refund. | | | | now, but still don't have enough put away to stave off |
| 1. Chip Away at Mountainous Debt: Debt on which | | | | an emergency like unemployment. That nice, fat tax |
| you're paying high interest rates and can never make | | | | refund would look great earning interest, and might go |
| more than minimum payments toward may feel like a | | | | a long way toward easing "what if" anxiety. |
| mountain in the way of your future. If you've received | | | | 5. Balance "Want" with "Need": If you're determined to |
| a large tax refund, you could lower that mountain | | | | spend part of that tax refund on something other than |
| substantially and save yourself thousands in interest. | | | | what we've discussed, consider spending a small |
| Paying down that debt now could mean the difference | | | | percentage on what you want and using the rest for |
| between enjoying, rather than simply enduring, your | | | | what you need. Delayed gratification is, after all, the skill |
| financial life later. | | | | that's required to build wealth and avoid debt. |
| 2. Plan for the Future: If there's tax refund money left | | | | Receiving an income tax refund may have triggered |
| over after you pay off debt, think what you could | | | | reckless financial behavior in the past, but it doesn't |
| invest in that could substantially change your future. | | | | have to this year. You have the ability to spend, save |
| Perhaps you'd like to finish college. Is a certification | | | | and invest responsibly, and this is a good time to |
| keeping you from a higher earning level? What | | | | exercise it. |
| maintenance would make a big difference if you had | | | | Before the tax refund check comes, sit down and |
| to sell your home? Think "long-term benefit" before | | | | make a plan for how you'll use it. Try to prioritize how |
| you give in to instant gratification. | | | | it's spent or saved by defining the long-term value. |
| 3. Beef Up Your Retirement Funds: Many of us lost | | | | You'll soon find that taking charge of a windfall is a |
| money from our retirement funds in the recent | | | | much better feeling than wondering where your tax |
| recession. Depending on your retirement investment | | | | refund went. |