McCook Gazette

Editorial

Don't let that tax refund burn a hole in your pocket

Monday, February 29, 2016

We noticed at least one car dealership offering special deals for shoppers who have tax refunds to spend on a new car, and that's a good idea, especially if it will reduce or eliminate the loan you have to take out to buy the car.

Tax refunds are significant for most of us, with the average taxpayer receiving a refund of nearly $3,000 last year, according to NerdWallet.com.

Putting your tax refund toward a major is expense can be a smart move, but Nerd Wallet and other financial advisers have other good ideas:

* Pay down credit card debt and other high-interest loans. Take the opportunity to consolidate debt, if you can't pay it all off.

* Put it away for a rainy day. Experts recommend at least three months worth of vital expenses.

* Invest in the stock market. Risky? Perhaps in the short term, but if you would have invested the $3,191 you received in 2010, earned a 6 percent annual return, you would have $4,270 today. The stock market is the only place you can get that type of interest -- the S&P gained 11 percent the previous five years.

* Invest in yourself by taking a college course, additional training, attending a work-related conference or joining a professional organization.

* Invest in your home, either to increase its value for sale or to increase your own enjoyment.

* Invest in a spirit-booster such as a satisfying experience like travel, music lessons or hobby.

* Donate to a cause you believe in.

Take a little time to think about what to do with your "windfall," and you'll be happier in the long term.