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Plan a Smart Financial Play: Don’t Blow Your Tax Refund on Frivolity

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Rather than heading off for Aruba, think about a smart financial play.  High-interest credit card debt can be a major drag on your income, with interest compounding month after month.  If you are receiving a tax refund, you are in good standing with your tax obligations.  Your best move after getting caught up with all delinquent taxes is to pay down any lingering credit card debt.  If this doesn’t resolve your full balance, look into transferring your remaining balance over to another card with an introductory low interest or interest-free rate.

The next best move would be to put a thousand dollars away in a “rainy day fund.”  You’d be surprised (or maybe you wouldn’t) at how quickly a tough time can sneak up on you.  If you don’t have anything put away to give you a boost on a rainy day, use your refund for that purpose.

The third smart play for your tax refund (which should probably come first) is to donate part of your refund to charity.  For starters, consider your house of worship.  You have been receiving spiritual nourishment all year long, so why not give back?  Your church, synagogue, mosque or other place of worship could use the boost.  And, you will gain a charitable deduction to boot.  While paying down your debts and saving for a rainy day are smart financial plays, giving a gift to charity is a sign of gratitude that will have a positive psychological effect even if there isn’t much you feel grateful for.  Cultivating a mindset of gratitude can be challenging during tough times, but focusing on what you have, rather than what you lack, is a habit embraced by the richest in spirit and the most successful in our ranks.

Category: Tax

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