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tax refunds

Published January 29, 2009
Views: 593

If you are getting back a refund what are you planning on doing with your money? I know most people will catch up on bills. I myself, am going to put mine in the bank. But I am seeing alot of people going shopping and buying things that they don't need. If you have a $500.00 light bill why are you only paying the minimum when you just got back a $5,000.00 tax return? Pay the WHOLE bill! Then I see the same people at Walmart spending hundreds of dollars on stuff they don't need and then they will be broke again by next week. I know they better not come asking me to borrow money because I will tell them to take that junk back to Walmart and get their money back!!

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My wife and I once paid our tax bill with a credit card! Not good. We're better now. She wants to buy me a new set of drums with our refund this time and whatever's left will go into "the black hole"(our checking account)for bills. BTW it's certainly not a good idea to let the government keep too much of your money all year with no interest but realistically for most people the interest you could earn at a bank is such a small amount it's not even worth the effort. And even that amount is taxable at some point.

Half of ours will go to pay off credit card bills. The other half will go towards our daughter's college fund.

I think I will buy a handgun while I still can.

I am going to pay to go to the Boy Scout National Jamboree at Fort AP Hill next August - it is going to be BIG!

I will admit that I am one of those who let's the government hold onto my money until the return. Frankly, if I got the money in my pay check, it would have been spent on things that in the short run wouldn't have mattered. But, getting in all in the lump sum and not expecting is a nice treat. Unfortunately, unexpected car repairs last year means that the return goes to paying down debt.

Made in U.S.A. - You probably already know the strategy of shaving 5 or 6 years off your 30 yr mortgage by paying 1/12th of a payment extra in your mortgage payment. For instance, if your principle and interest (P&I) is 600$ (excluding the tax and insurane portion), just add $50 to your payment. It will save you thousands in the long run of the loan. Just mae sure that the extra is posted against your principle and not directed into your next month's payment or escrow.

This is the first year filing with a mortgage included in the return. How sweet it is! Although only a small portion of my monthly payment was applied to the principle of the mortgage, all that interest - and part of the escrow/property taxes withheld - was like putting fertilizer on my refund. I wish I had of bought this place a long time ago. Like 20 years ago when I moved to Raleigh. But better late than ever and plus, when I got this condo I got it at a real bargain and also a very low interest rate...all right before the market and the economy started it's nosedive.

With that said, renters...buy if you can NOW. The deals currently out there now, along with the interest rates, will disappear when (if) the economy reverses it's current coarse.

As for my refund....I'll pay off my credit cards. That and the mortgage are all I owe. After paying off the cards, the rest will go into a 13-month CD @ hopefully 3.5% interest rate.

"If you are getting a $5,000 refund, you have a serious problem with your finances."

True dat.

I'm looking at a bigger refund that usual this year (I usually get a wee bit back, but nothing to write home about... still, I'd rather not owe any, so I let it ride)... I need to adjust my withholdings now that I see how I'm netting out with the property tax deduction for my new house.

No thanks to letting the government borrow my money for a year. LOL

oops, I forgot. There are people that get checks for earned income tax credit and head of household that I am not too familiar with since my income doesn't fit that profile.

Con, by not refining your withholding to break a little closer to zero, you are providing an interest free loan to the government. The damage is compounded because that is money that is not working for you in interest payments. If you lived in California, you would face the possibility of getting an I.O.U. instead of a rebate check. It is your business, but isn't generally accepted as a financial best practice.

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