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Spending Control: Using Tax Refunds Wisely

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Donell EdwardsDonell Edwards, Blogger

About Donell Edwards: Donell Edwards is President of CWR Media and is also founder and publisher of The College World Reporter (CWR) magazine and CWR World News & Information Service.  He is also a professional speaker, freelance writer, and entrepreneur.

 

 

Know Your Money
Tuesday – March 18, 2014

Spending Control:  Using Tax Refunds Wisely
By Donell Edwards

According to a recent analysis of Federal Reserve statistics and other government data, average American household credit card debt is $15,252, average mortgage debt is $152,209,  and average student loan debt is $32,986.  If you fall somewhere within these ranges the goal of this blog is to help you systematically get out of debt.

We vehemently attack spending because spending either increases debt, or prevents consumers from reducing debt.  So the question for today is what should you do with your income tax return if you are fortunate enough to be among those receiving a federal or state income tax return, or both.  Another question is are those individuals really fortunate?  We will discuss that question in another blog.

Getting back to the question at hand.  What to do with the tax return or returns.  It is a ritual with some people to look forward to receiving their annual income tax return to make major purchases, to go on vacation, or to fund other projects.  If you have excess credit card debt, a mortgage that you are paying off, a vehicle that is financed, and a student loan, any or all of the above, is it really wise to use all of your income tax return to splurge on frivolous things?

If you are really serious about taking control of your finances the very first thing that must be done is to reduce and ultimately eliminate your debt, all of it.  So how you use your income tax return is very important.  As you know we encourage financial meditation, so meditate on this, take some time to carefully think about your plans and what is in your best interests as you work toward your goal of getting debt-free.

There are two very good articles at the end of this blog that may help you as you think through how to make the best decision for you.  Make sure you use your tax refund wisely.

 

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Brave Souls Wanted:
If you would like to share with our readers how “bad” spending habits have affected you, anonymously or otherwise, for our upcoming special, “Confessions Of Spendaholics,” please send your experience to comments@knowyourmoneyglobal.com.

Suggested Reading:
Should You Focus On Saving Money or Paying Off Debt In 2014                             
http://money.usnews.com/money/blogs/my-money/2014/01/09/should-you-focus-on-saving-money-or-paying-off-debt-in-2014

Should You Use Your Tax Refund to Save Money or Pay Off Debt?                        
http://www.gobankingrates.com/tax/how-to-spend-tax-refund-savings-account-paying-off-debt/#.Uwdq4xvYjV8.email

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1 Comment

  1. I agree on putting that refund to real use eliminating debt.
    I use to spend spend spend. Now I find myself climbing out of that hole which I’m over half out of.
    your counteracting if saving because of interest. Fees. By not paying down your debt first.
    you cannot get ahead of the game if that’s all your doing.
    also think budget is key. To helping you get ahead.
    if I were you guys I would follow this mans blog and surround yourself with likewise people to help you get out of debt.

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