Articles - Archived Money Matters

Spend Tax Refunds Wisely

According to the IRS, the average tax refund people have been receiving for the past couple of years has exceeded $2,500. Thinking widescreen TV or weeklong vacation? Consider what else you could do.

Pay off credit cards. Since this is likely the debt with the highest interest rate, start here. If you can knock down this debt—or eliminate it—think of all the money you'll save in interest alone.

Fund your retirement. Did you know if you take $2,000 and invest it in an IRA comprised of stocks that earns 11 percent (the historical stock market average), it can grow to $53,416 in 30 years? Put in $2,000 every year for 30 years and you're looking at $495,736!

Establish a rainy day fund. Try to have at least three months of living expenses on hand for unexpected situations, like a job layoff or health problem. Put this money in a Credit Union Money Market Account and restrict ATM access. The money will earn a higher interest rate than a savings account, and you won't be as tempted to spend it because you can only access by visiting a branch.

Invest in your home. The housing market may be down now, but it won't stay that way forever. In the meantime, increase your home's value with a new roof or bathroom upgrade. It will pay off later.

Treat yourself. Don't overdo it, but putting 10 percent toward something just for you should make for a nice treat, and it may also help curb the desire to make a larger impulse purchase.