In the past I have begged you to stop giving the IRS an interest free loan so that you can receive a tax refund later. Most of you did not listen. I guess old habits die hard. OK, since you insist on receiving this refund, sometimes, being the largest amount of money you will have in your hands at one time, be smart with the money. I was in the gym the other day and overheard two ladies talking about their upcoming refund and their plans for the money. One lady was perplexed because for one reason or another she owed the IRS and they were going to take her refund check. She really needed this money and was talking to the lady friend about ways to work around this problem. She even said ‘I wish I could borrow someone’s kid.’ Here it was this poor lady had banked on receiving his money for the government (as she had in prior years) and now wasn’t going to have the money. I continued to listen, yes I’m nosy, to figure why she needed the money. She needed the money for the down payment on a car.
Tax refunds can be great if you use them correctly. If you go to the mall and spend the all the money on clothes and shoes for you and your kids, I’d say that is a poor use of the money. The above lady was putting a down payment on a car. Arguably she had good intentions. However, my thought was not to buy a car. If you have a $6,000.00 refund check why not buy a car for cash. If you need a car and don’t have one and you have dreams of being rich or at least financially secure, then stop creating debt. Don’t pay a car note, own the car. Taking your money to just create a bill for you is not the smartest thing you can do with your money. Or better yet take the money and put it in the bank and start a savings account. If you don’t have a savings this would be a great way to jump start your savings. Did you receive a high as hell electric bill and didn’t have the money to pay for it, did your car break down and you had to borrow the money to fix it, did you have to move and not have the money to pay your security deposit, etc? Having a savings would make emergencies not so traumatic. Not having the money you need for your necessities makes a bad situation an awful situation.
The moral for my story is to put your tax refund to good use. Don’t just blow it and have nothing to show for it 60 days later.