9 Smart Ways to Use Your Tax Refund

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9 Smart Ways to Use Your Tax Refund

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A big question many people will ask between now and April 15th is, "What to do with the big tax refund?" Hopefully you will be one of the 9 Smart Ways to Use Your Tax Refundmillions of Americans receiving some money back from Uncle Sam.

The IRS sends out nearly 100 million income tax refunds each year. The federal refund average total is $3,036, an increase of $266 compared with the same period a year ago. Many users file electronically and use the help of a tax professional.

To read more statistics about tax returns click here: IRS 2010 Filing Statistics

There are several things to consider when determining how to leverage your refund. Here are a few suggestions:

1. Pay Down Your Debt: Take this opportunity to pay off your debt if possible. If you cannot pay off your debt, make lump sum payments to pay down your debt or pay off one creditor and redistribute your monthly payment amount

2. Start an Emergency Savings Account: Do not put this off any longer! If you do not already have one, I would encourage you to dedicate a portion of your refund to start an emergency saving account. If you have an emergency fund established, fortify that account with a healthy cash infusion from that refund.

3. Pay off Holiday Purchases: Many spent more than they expected for the 2011 Holiday season. If you were not able to use cash, use the refund to pay back any purchases made on; credit cards, same as cash offers, or any no interest deals.

4. Pay Bills in Advance: Send a little extra to your utility, cable, cell phone and other companies for services used every month. This will provide a little cushion in case of an emergency, or buy you a little breathing room in your budget.

5. Pay Insurance Premiums: This is a good time to eliminate your quarterly or annual car and life insurance premiums. Pay them in full and you will have one less line item on the budget sheet.

6. Plan a Vacation: If you and your family take a vacation every year, use the funds to pay for the family vacation in cash. This will alleviate the stress of finding room in the budget or using credit cards to finance your 'vacay.' 

7. Personal Debt: Pay back personal loans from family and friends. This is a gray area but one that can cause a lot of stress for both the lender and the recipient. If you owe family or friends - pay it back; you may need them again in the future.

8. Treat Yourself: Yes I said it...treat you! You work hard all year to provide for your family, pay the bills, pay off your debt and more.  Now is your guilt free chance to plan to do something nice for yourself. You may want to take the kids to the big game, go to a fancy restaurant or the spa. Whatever you do, have fun!

To read more blogs from Coach Tammy, click here!

Coach Tammy, CareOne Debt Relief Services Community Coach Coach Tammy

Thomasene "Coach Tammy" Bradford joined the CareOne social media team as a Social Media Specialist in September 2009 and works to provide the highest level of customer service in the community. Tammy is passionate about helping people through the debt experience and having been through it personally, she knows what it is like! See Tammy in action in the Ask the CareOne Expert forum and throughout the community.

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  • Love the ideas! Getting an emergency fund started is so important! My husband and I were able to put our entire refund into our emergency fund this year, and we both sleep a little better at night.

  • I love the ideas.  A way to help us not to feel guilty if we do decide to treat ourselves.  Getting out of debt is not easy and it takes a lot of time (years) and sacrifices.  I believe it is good to be able to treat ourselves once in awhile.  Especially if it is done by way of cash.  

    The first year I was on the program I put it against my debt.  Last year I went on a cruise.  This year again it went  on my debt making it possible for me to hopefully reach my goal of being out of debt with my September payment (or at least to be out by the end of the  year),  Thank you for letting us know we don't have to feel guilty for doing something for ourselves once in awhile.  I love this post!!!

  • mdavis1964 - good job for treating yourself and staying focused on your debt! You are getting closer every day, pretty soon you will wake up and realize you are making your LAST payment - you are almost there!!

  • @saracarr and mdavis1964, so glad to hear that you love the ideas! I Love reading what everyone is doing, Thanks for sharing!

  • Great post and some great tips here, thanks for sharing.

  • Thank you saracarr!!  I certainly can't wait to be in your shoes :-).  You should be very proud of yourself and your accomplishments!!

    @CoachTammy~You have helped me so much through this journey, thank  you!

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