A good chunk of us will be getting either a tax refund, or a tax rebate, or both. These could run thousands of dollars each. Chump change for some of us, a substantial sum for some of us, a downright windfall for some of us.
Whatever the magnitude, it's extra money rolling in. It shows up in your mail or your bank account one day.
Then what? If you haven't received your refund yet, do you know what you're going to do with that money? What will you do with your rebate if you're getting one?
If you don't know where this money will be going, please take a moment right now to decide. If you set aside this money for a particular purpose before you have it, the chances are much better that it will be used for that purpose than if it get intermingled with your other money without a plan. In this case, chances are better that it will be spent without any particular goals in mind, and it will be gone. Or worse, you anticipate the refund and spend it before you get it.
Here's what I plan to do with our refund and rebate: Set aside 80% of it in a separate account as an emergency fund, and put the other 20% in our checking account to spend on whatever.
Just the action of writing that statement down will help us to build our cash emergency fund up again. Writing down your purpose for your refund and rebate will help you accomplish your goals with that money. What things could you do with your refund and rebate?
- Set up/add to an emergency fund, like we are.
- Make a car repair that's overdue. Some things slide when money gets a little tighter, and maintenance on cars is one of them. (“Hey, it still runs, and I need to pay my credit card bills.”)
- Pay down your credit card debt. This is always a good use of this money. A high-interest card with a balance is an especially good one to pay down.
- Pay down other debt.
- Fund an IRA. Retirement savings is another good place for little windfalls like this.
- Take a vacation. Hey, it's your money. Who am I to judge whether you need a vacation or not?
Did you write down what you're going to do with your money? Hmmmm?
I was going to use it to start an emergency fund, but the government has a different plan for it, so I won't get one.
You should use them to open a SmartyPig account and learn good saving habits AND THEN stimulate the economy. SmartyPig.com is the bank/social networking site we just launched this week that allows you to invite family and friends to contribute to your account, gives you additional incentive boosts from top retailers who sell exactly what you’re saving for and currently 4.30% (APY) interest on the money you’re saving. It’s fun and educational, kind of like a 21st Century version of a piggy bank.
We are taking half of ours to pay down debt. The other half we are using on home repairs and to stock our pantry.
Good idea to write down what you will do with your rebate. That's good advice for all your money. It's commonly called a "budget", the "b" word. I use the cash flow system, it sounds more professional and it really is the same as a budget. This is what businesses use and it works great for individuals too.
Try it at http://www.ProsperingYou.com
Half on debt, half on savings. At least I say that now…