 |
 |
|
|
9009 West Loop South, Seventh Floor, Houston Texas
1-866-889-9347 |
CCCS of Greater Chicago
A Division of Money Management International |
|
Regional Headquarters - 70 East Lake St., Suite 1115, Chicago Illinois |
|
|
|
|
|
|
 |
|
Put Your Income Tax Refund to Work |
|
 |
|
| |
|
 If you've already filed your federal income tax return, you're probably checking your mailbox every day, looking for that special envelope from the Internal Revenue Service the one with your tax refund check inside. Every day, you fantasize about what you're going to do with all that money, because you've worked hard all year and you deserve a new stereo, or a big-screen TV, or a new car, right? Wrong!
The worst mistake you can make when you get a refund from the IRS is to perceive it as "found" money. Many people tend to forget that their refund is, in fact, "earned" money. It's money that was withheld from your earnings throughout the year to pay your income tax, and the only reason you're due a refund is because your employer withheld more than necessary.
In fact, if you find that you receive a large tax refund every year, you should consider reducing the amount of your withholdings. For example, if your refund this year is $1,000, that means you could have increased your take-home pay by more than $83 a month without owing anything to the IRS on April 15.
In effect, by having so much money withheld from your earnings, you are establishing a savings program that earns absolutely no interest. More to the point, you are extending an interest-free loan to the federal government. Most people I know think twice before giving an interest-free loan to their best friend. So if you're getting a big refund, and would rather have that money on your paycheck, talk to your employer about reducing your withholding amount.
If, however, you do receive a significant refund, you still have to decide what to do with the money. Too often, people purchase something they don't really need a luxury item that's more of a toy than a necessity. They'll take a cruise to the islands or buy a new wardrobe. Unfortunately, that's not the best way to put your refund to work. The best way to use those funds is to eliminate or reduce your debts.
Make a priority list for repaying your debts, starting with the highest-interest loan or credit card first and working your way down. Then put your refund toward the top item on the list. If you have any money left over, put it toward the second item on the list. If your refund is high enough, and your debts low enough, you might be able to wipe the slate clean.
And by all means, don't use that refund as a down payment on a major purchase unless it's something you absolutely need. Using that money as a down payment on a new car only increases your debt and adds a new payment to your monthly bills.
If you don't have any debts, use the money to invest in yourself. In other words, put the money in a savings account as an emergency fund, just in case you ever lose your job, or need a new roof, or have a medical emergency. Another option for your refund is to consider a safe investment program such as a mutual fund or CD for your future. Check with a reputable investment adviser for more information.
|
|
|
|
|
|
|
| | Home |
Privacy Statement |
About CCCS |
Contact CCCS |
Site Map | |
|
CCCS, A Division of Money Management International
Regional Headquarters - 70 East Lake St., Suite 1115, Chicago Illinois
Corporate Address - 9009 West Loop South, Seventh Floor, Houston, TX 77096
|
|
|
|
