A whopping 59 percent of you said that you'd be happy if you got a fat tax refund, because it tricks you into saving more money than you would if the funds were left in your hands. And while I think your money would be better off earning interest in a high-yield savings account all year instead of the government earning interest on your money, there's no turning back the clock for your 2007 return. I'm sure you've been thinking of what do you with your tax refund, but to see my suggestions just read more
If you're carrying a balance on your credit card bill but you don't have an emergency fund that equals at least three months living expenses, save about a third of the refund and put the rest toward your debt. And if you're all set with your emergency fund or even if you're just off to a good start, but you've been struggling to crack away at your debt, this one's a no-brainer — put it toward your debt!
Being responsible with your money isn't exactly the most fun way to treat it right now, but it really does pay off later. Remember that the money you're getting used to be part of your paycheck and you worked hard for that cash. Try your best not to blow it on a big purchase that you normally wouldn't consider, especially if you're walking around with credit card debt or without an emergency fund for a rainy day.
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Great advice, Savvy! I will be both saving some and paying my credit card down.
1I am going to put half towards my MC and half into my savings
2Hopefully it's a lot...
won't it make sense to put the whole thing towards your debt so you can reduce/eliminate paying more interest??
3pay credit cards bills and buy my kids spring clothes.
4We're using Hubby's bonus to pay off our only credit card and we're saving our refund until we need something or want to go on vacation next year. I actually claim more so that I get the money in my paycheck, but Hubby doesn't so we get more back every year...
5Fabulous advice! Paying down my debt is numero uno for me, then the rest goes towards savings.
6Pay off important bills, credit card... But spend a little on yourself... even if it's just a pedicure
7Bills!
8Unfortunately, my money will be going to the dentist...
94 new tires. not priceless..
10AAAGGHH mine has not come yet and I just want to throw 80% to my cc debt and the rest to my dentist. I am trying so hard to be good but the longer it takes from getting here the harder it is from me wanting to spend all on something wonderful but not good for me like a prada fairy bag!!!
11The engine of our (very old & rather dysfunctional) car died today.
Guess what we'll be purchasing with our tax return? (Another used vehicle, so we can pay cash -- in full -- no car payments for us!)
12lol, refund? i wish!
13Doing both - I got a new car recently and this will help pay some of it off. The rest of it goes into my Savings until I get a solid job and can start and contribute to a Roth IRA.
14princessjaslew.. you said "won't it make sense to put the whole thing towards your debt so you can reduce/eliminate paying more interest??"
the point of an emergency fund is so you don't have to use credit if something comes up that you can't afford or don't expect..
i have always thought like you, but realized the importance of it recently when $3000 worth of unexpected incidences happened in the course of 2 weeks. Instead of being able to pull from a savings fun, I had to increase my line of credit and charge it..
It's important to pay off your debt, but it's even more important to avoid racking it up.
15We're debt-free, and already have a sizeable nest egg.
I purchased a three-stone sapphire ring.
16I might go to the dentist or put it towards getting a car. Probably the dentist. How much does it cost to get wisdom teeth removed? haha.
17I am going to go with the Dave Ramsey school of thought here and am going to disagree with Savvy. Check out his Baby Steps, they are great! I understand that one of you had $3K of unexpected expenses, but that's not how much a basic emergency fund is.
Put $1000 into an emergency fund. Then use the rest to pay off debt. Once you have paid off your debt (google debt snowball - several theories, Ramsey's is paying off the smallest amount first and then moving on to each bigger amount, others say to work on the highest interest rate first) then you build your 3-6 month of expenses savings. That is in case of a layoff, larger expenses, etc.
The best suggestion is to find out why you are getting so much back. Adjust what you're claiming so that the proper tax amount is taken out. Leaving YOUR money in the hands of the government for a year so that it can earn interest for the gov is a waste! Get your money back and invest it yourself so YOU can be earning that interest or better yet...not having to rely on a tax refund for anything!
18Spending it as we speak - on the mortgage. With hubby off work for surgery, we couldn't use the refund like we wanted, but instead used it as we needed to.
19I'm buying spring/summer clothes for my son and a couple YMCA summer camp sessions. Then paying the rest of my credit card that I didnt pay with my bonus at work and saving the rest.
20Paying off some student loans.
21i put mine towards my credit card! its paying off my europe trip from last year lol (i may have shopped too much in london
)
22Mine from federal was $1500. I put $1200 toward debt (racked up some sizable cc debt last year when unemployed for a stretch which is getting close to the end), $100 to a new suit for work, and $200 straight to savings. I'm applying to law school, and with all those costs, I have to have more in savings than the $1000 emergency fund so I can still have that fund after applying.
Also, ay, ay, ay! If I get invited to one more wedding, I'm going to have to raid the emergency fund. Can't my college friends wait until I make 100K a year to get married, or at least have a destination wedding in my current town? PLEASE?
23Dave Ramsey, Suzie Orman, slighlty different concepts, but overall on the same track.. I did not say personally that I had a 3,000 emergency fund, or that anyone else should..I said I wish I had a buffer instead of resorting to credit..
The one thing I do agree with Daisey on is, if you're getting so much back that you're paying off credit cards, or loans, etc you may want to check why..
24I am paying bills and we are going to go on a cruise! We need a vacation and are trying to buy a home so this might be our last chance for a vaca for a while. I have been trying to put more into savings though.
25I am putting 3/4 of it towards my car, and saving the rest. This way I won't have a car payment, and I will have some money saved for when I go back to school for my second B.S. degree!
26I just got my tax refund and I did just as you suggested: I used it to pay off one of my credit cards and put what was left into paying off half of another! Finally I see light at the end of my "debt-filled tunnel."
27I get $46 for my federal tax refund, which just barely covered my tax preparation costs! It's a little disappointing to not get a larger sum, but I suppose that means I'm doing it right - I'm withholding the proper amount of money, and the government doesn't get to earn interest off my dough.
I actually owe the state of California, though. :shakes fist:
28I went shopping with it.
29i'm buying a 20$ pair of shoes from target, using it to pay my april student loan payments, and the rest is going towards my credit card. i guess i actually need to get my taxes done before i talk about how i'm going to spend it though haha.
30Hmm... Mine will be going to my Discover bill & into my savings account! And maybe a little for me to spend. Just a little though!
31I have to admit, I'm buying a plane ticket to visit friends in L.A. this summer...but the bulk of it I was thinking I'd split between a credit card payment and my savings account.
32Great advice. But unfortunately I'm not getting a return this year.
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