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How to “Spend” Your Tax Refund

Author: Financial Success | Image: Financial Success

We are sticking with the tax season theme here at the Student Loan Education Office! Props to all students who took advantage of the free Volunteer Income Tax Assistance (VITA) here on campus. If you haven’t completed your taxes, there is still time to claim a spot on their list! I know tax season brings out the procrastinator in all of us. Even though we all bank on getting back a decent tax refund and dream up things we can buy with it, this is also a dangerous time of year for your financial security. Some of you may be getting money back from both Uncle Sam and your state. The danger is that you blow the money on a want, rather than focus on your needs.

And that’s a shame, because chances are your refund could be a serious chunk of change. The average refund last year on federal returns was nearly $2,800.

While it would be nice to spend that money on a vacation or a new flat screen… We need to spend realistically, and think about considering delaying the gratification of a shiny new purchase. Or anything that qualifies as a “want” for that matter. It’s always a good idea to focus on “needs” first.

Here is a short list of important needs that might be a good use for that tax refund!

1. Pay off high-interest credit card debt.

2. Pay-down a high interest car loan.

3. Pay down student loan debt. (This one should be number one!!)

4. Build up your emergency savings. 8 months of living expenses is the ultimate goal.

5. For you investment people : Fund a Roth IRA.

These are just a few practical ways to spend your tax refund. If you don’t, you may experience a feeling of “Aaaannnnd it’s gone.” Choose wisely! 

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