Ask Alanis


If you happen to be one of the lucky ones to get a tax return you may just be pondering all of the coveted items of your heart's desires. All of the things you've needed – or more like wanted. "I'll save" you say. Chances are if you don't have a plan before you receive your refund, before you know it, it will be depleted. Here are some suggestions to effectively utilize your taxes.

Overcome Your Debt

If you live paycheck to paycheck what better opportunity to pay down debt than with unaccounted for cash? If possible, determine the card with the highest interest rate and either pay the entire amount owed or make a large payment. By doing this, you could be saving yourself monthly interest, over the limit fees etc. In some cases it might be more feasible to pay off a few smaller credit cards. I'm sure you'd feel accomplished to pull your credit report and see a few items "paid, closed" and your credit score will also reflect this positive action.

Emergency Fund

Why borrow from a credit card when you can take advantage of an emergency fund you've built on your own and pay it back without penalties and interest rates? A considerable measure of money in the bank may even motivate you further to contribute to a savings each month. A standard financial rule-of-thumb is to save 10% of your income. A 10% savings of a $30,000 net income would result in $3,000 in the bank at the end of the year plus the money set aside from your tax return. I'm sure you can think of numerous occasions this would have come in handy including a very popular Holiday at the end of the year.

Invest for Your Future NOW

Let's think bigger, an investment for your future goals can start now. What are some goals that appear somewhat out of reach? College or retirement for example, these are things that you should likely start planning for as of yesterday. Thankfully, it's never too late to start. Start with your tax return and even automate a monthly transfer from your checking to that savings account and it will continue to increase.

Disregard last year and make greater choices this year.