Tax time: What to do with that refund?
It's tax season, which means many of you are sitting down and preparing to file your income tax returns. For some, that means sending in a check with your paperwork. For others, it starts a countdown until they get their tax refund.
Filing your taxes is now easier than ever, but one hard decision still remains: what to do with that refunded money?
"Everybody's different -- you know, everybody's in a different financial place," said certified financial planner and financial advisor Ed Wettig. "But I would always suggest that you give that refund a purpose from the start."
Wettig says the purpose of your refund should be based on where you're at financially, but there's one priority he believes everyone should have.
"Everybody, regardless of your age, should have an emergency fund," Wettig explained.
Wettig said an emergency account should equal three to six months or more of living expenses. It should be in an account you can access quickly, and without a penalty. He says if you already have an emergency fund, the next priority would be to look at your debt.
"You might want to look at paying off some high-interest credit cards, car loans or just small balances to get, to streamline your credit profile," said Wettig
For those with no debt, and who already have an emergency fund in place, Wettig recommends putting your return toward something that will pay off long-term.
"Might be a home remodel, or redo your kitchen -- lets say that will help the value of your house when you go to sell it," said Wettig. "Short term, you know you can take yourself to dinner, but you know that's a short-lived treat."
If you are receiving a refund you can track it at http://www.irs.gov/Refunds/Where's-My-Refund-It's-Quick,-Easy,-and-Secure
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