Thursday, April 1, 2010

What To Do With Your Tax Refunds

Hello my fabulous friends! So sorry I've been away all week. I've been recouping from major plastic surgery.

April Fool's!!!!

Pranks and taxes are some of the things we can always look forward to every April. That magical check that appears from the the US Treasury. If you're anything like me, the thought of a tax refund evokes images of spa getaways and shopping sprees. I still have major buyer's regret not picking up a Chloe bag before I left my last retail job when I had the employee discount. Maybe this is the year I'll buy this gorgeous Chloe Marci Hobo Bag.



That yearly check that arrives is always so exciting for me. In years past I've treated myself to a new camera, my awesome bike and a fabulous trip to Mexico. Why not? I worked hard for it. It was my "bonus" and I was going to splurge on something I couldn't do all year.

But now that I'm 40, I'm wondering if that's the best way to make use of this money. I'm thinking, probably not.

But don't be a tax April fool.

Before you pack your bags and sign your name on the sales receipt, really think about how the money can have real, lasting power. That relaxing Swedish massage might be relaxing, but think how much better you'll feel when your debt is under control or even paid off.

After all, your tax return is just a repayment of an interest-free loan you gave the government in the previous year because you OVERPAID them. It's your money that you rightfully earned, just like your pay check and isn't fun money courtesy of Uncle Sam.

Sorry folks.

Here are some suggestions WIFE, the Women's Institute for Financial Education, on what to do with your refund and have some financial meaning to your life:

Set aside a portion of your check, maybe about 20 percent, for your own pleasure. Take the time and pick something rewarding for your life. The bike that I purchased three years ago brings me so much pleasure and it was an investment in my health so the money was totally worth it. The same is true for a vacation I took with Michael to Mexico. I will always have the lifetime of memories.

Now for the business side.

If you have credit card debt, this tax refund can be used to start paying down your debt. First, you should use the refund to pay off bills that you are late on. Secondly, you can use the refund to pay off your credit cards with the highest interest.

If you're lucky enough to not be in debt, you can use the money to set up a rainy day fund for the day you truly needs it. I'm talking about a real emergency like an unforseen health issue or home repair and not a shoe sale at Manolo Blahnik.

If you already have money set aside, use the refund to increase your retirement plan. You could either increase your contribution with your company's retirement plan or contribute to a Roth or traditional IRA.

If you already have everything you need and are all set with your retirement, you can give generously to me.

Are you getting a refund? What are you planning to do with your cash? Let me know in the comments.




10 comments:

  1. Ha ha -- don't lie....you were getting your face done to look more like Snookie.

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  2. All I'll need is the Sucker Punch!

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  3. LOL Great comment Wendy!! And great post Jen. You give good advice. I am getting a refund -- and it's going straight into the bank!! (Though a Chloe bag would be nice!)

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  4. GREAT pointers and wake up call. I haven;t received my check yet, but had it already spent in my head... after reading these ideas, I am going to be a bit more practical with the money. Definetly put the 20% aside for me and a trip to Kripalu (yoga retreat).. but the rest will be done with the future in mind!
    I would love if you would check out my new blog and give me any pointers and or comments!!
    thanks
    tiffany
    www.integrativehappiness.com

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  5. Jen,
    Thanks for the pointers! And good points....once we are older we must think a bit more about that money :(
    Unfortunately we barely got anything back-oh well!
    Life is good anyway :)
    you got me on the plastic surgery thing-i was thinking do tell! do tell!
    hee hee
    have a great day!

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  6. Great and practical ideas. Forty is making you a wiser person. xxoo Rainie

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  7. Really good article, thank you for sharing, I will always look at the future, too talented.

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