What to do with the income tax refund?

Since I'm on my way to the tax office this morning, anticipating some type of income tax refund, this article about what to do with the income tax refund struck my fancy.

Your income tax refund: sofa, pecs, or freedom?
By: Dar Arechederra

What will your tax refund 'buy' for you this year? A lovely sofa? Perfect Pecs? Freedom?I hate to admit it, but I almost bought the Pecs. I opened a colorful brochure that caught my eye and, there it was ... the perfect way to "invest" my refund: in myself — with my very own home gym! Who doesn't deserve those Abundant Abs, that perfectly Toned and Sculpted Body ... all for under $1,200, with payments under $35/month!

I was drooling. I had to have that gym! I deserved it! I'd wanted it for over a year now. Good things come to those who wait, right?

I found some even smaller print at the bottom — the APR was just under 22%! I exhaled. Slowly. It felt like someone had stopped Bob Seger's "Beautiful Loser," right at the best part of the song. The drooling stopped. The adrenaline retreated, waiting for the next spending rush.

My sanity returned.

Still dazed, I followed the efficient-looking tax lady back to her desk, all the while calculating how much interest I would have paid for those Perfect Pecs ... those Adorable, Abundant Abs. Just how tired would my bones be by the time I had this home gym paid off?

I didn't even have the refund in my hands yet. But I was holding a brochure that had the power to devour any refund I might have ... before it could chill in my bank account.

4 Tips to Keep the Drooling at Bay
1. Decide ahead of time not to spend it. If you later change your mind, ask yourself, "is my 'want' important enough to use this lump sum of money?"

2. Tuck it into savings immediately (preferably your emergency account). Or, if that sends you into a cold sweat, put up half of it. Avoid the money sponge. Don't be tempted to leave it in the checkbook!

3. Think of your tax return as "freedom money," not as "extra." Add bits of money to it for a 'Freedom-To-Be-My-Own-Boss' account. This is money you've managed to do without over the past year. You didn't miss it then -- no need to miss it once you've tucked it away.

4. Picture yourself debt free. All credit cards are paid off. You have a few thousand dollars in several money accounts. You are contributing to your retirement account on a regular basis. Bill-paying time is stress free. You can go out from time to time, paying cash as you go. Emergencies are covered. Your money is under control. Your control -- not that of the credit card companies or debt collectors.

Will this year's refund bring you a new sofa, Perfect Pecs, or the Feel of Freedom? You have the *power* in the palm of your hand -- to take a huge step forward in your financial life. Will you DO it?

Article by:
© 2004 Darlene Arechederra Darlene Arechederra leads the delightful series, "Coming Home: A Woman's Journey to One-Income Living." Women of two-income households who want to find their way back home from the workplace will enjoy this gentle, energizing jumpstart. Visit with Darlene at www.AffordtoStayHome.com/info.htm

This is our first year to file with me working completely for myself, so we're not sure how much the refund will be. I sure hope it's something!

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