It's tax time! What should I do with my refund?

morning_glorie
morning_glorie: Kelly Phillips Erb is a contributor at Forbes and runs the blog Taxgirl.com. She said it really all depends on where a person is at financially. Erb said that conventional wisdom tells us that we shouldn't get a big refund, because you don't get interest with it. Erb says that historically, if someone received a big refund they were looked at as doing something wrong. She said now, more taxpayers are under the gun financially and are looking at a refund as a forced savings account.

"A lot of taxpayers are now holding onto this big hope that they're going to get a big check and they're going to use it to pay off credit cards or they're going to use it to pay rent," said Erb.

Erb said she has always advised against getting a big refund, but she says that given the current economic climate it makes to sense to bank on that big chunk of money.


But once you get your refund, what should you actually do with it? CNBC personal finance correspondent Sharon Epperson said it should go towards retirement first.

"That might seem really kind of crazy. Especially if you're in your twenties and you've got this money and you really just want to go to Cabo and you really just want to have a great vacation and get out of this weather," said Epperson.

Epperson said the best advice she can give is to put it in a Roth IRA, since contributions you put into it can be taken out free of penalty.

Epperson said that paying off long term and high interest debt is also a priority.

"I'm just hoping that people are not getting this huge refund and getting a ton of credit card debt," said Epperson.
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morning_glorie
morning_glorie: Share your ideas! New car? A vacation youve been planning? Remodeling project? A new I-phone? Some new clothes? New furniture?
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smaccaroni
smaccaroni: I look at a refund from the IRS as alowing the US governement use of my money for over a year and not pay me any interest on it. Why pay the IRS? why not savee some money each paycheck( place in a cd in bank etc) for yourself and then you may even earn interest and have it when you need it.
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morning_glorie
morning_glorie: wow great idea smaccaroni!
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calybonos
calybonos: I'm going to buy a fly swatter.
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No_User_Name
No_User_Name: Australian government are highly allergic to giving back big refunds ....taking big, yes ...giving,no.

Whatever we get this year will goes towards our family holiday to the snows.
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morning_glorie
morning_glorie: aint nothin like a good old fashioned fly swatter to get some of that much need fly swattin done.
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morning_glorie
morning_glorie: awesome fuzzy hopes you and your family have a great time at the snows!
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SillySally8
SillySally8: I personally get a large refund as I use my vehicle for work purposes( I write off any and all stuff for vehicle)...and.. I put some into savings first and foremost!!!... and catch up on heating bills over the winter(this year unusually hight)... and use the rest to breatheeeeee for a lil bit! or it gets turned into a home reno of some sort which increases the value of my property for selling time...either way..i like the big returns
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morning_glorie
morning_glorie: great ideas sally! ty for sharing
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Wild__
Wild__: I recommend you go to Las Vegas and put the entire amount down on one single hand of Black Jack.
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morning_glorie
morning_glorie: i dont care for gambling but thanks anyway
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Wild__
Wild__: Oh, well them blow it all on hookers.
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morning_glorie
morning_glorie: One thing for sure whatever you blow it on ...is what youll blow it on.
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smaccaroni
smaccaroni: I finished our taxes and between the state and federal we are netting a return of a wopping $4..so maybe I can invest it somewhere like fast food place or buy a gallon of gas for my car..LMAO!!
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morning_glorie
morning_glorie: LOL .....maybe switch to a bicycle?
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R E B E C C A
R E B E C C A: I dont know.
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calybonos
calybonos: I'm going to invest it in classic art.
There's a picture of dogs playing poker that would look good next to my Elvis on black velvet.
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Outbackjack
Outbackjack: Got a very good one this year.The best ever!

I went out and bought a car and a caravan.
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Big Bopper
Big Bopper: It is already your money that has been (over) collected by the government revenue agency. If you are wise with your money you will not be carrying a credit card debt. If you just found financial wisdom, pay off your credit card with the first available money you have, in this case your tax refund. Otherwise, put it into a safe investment or even an interest paying savings account. In Canada, you could use a tax free savings account. It is after tax money, so try not to pay tax on it again.

I agree with Ms. Phillips Erb. It is already your money, do not just use it up. Use it to bolster your financial position.
(Edited by Big Bopper)
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Big Bopper
Big Bopper: Hears a great tune to help get your brain around having to pay so much: YouTube Robert Cray Band
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