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Weekly Tips

Put Your Tax Refund to Good Use

If you aren't getting a tax refund this year, congrats—you successfully avoided giving the government an interest-free loan.

On the other hand, if you happen to be one of the millions entitled to a big fat refund check, then you're probably already thinking about what you'll do when the cash hits your bank account. Here are a few suggestions to help you put your refund to good use.

First, set aside a small amount to treat yourself or the family to something fun. Life needs to be more than just saving and paying the bills.

Now, if you don't have at least six to twelve months of expenses saved in an emergency fund, consider putting the rest into a high yield online savings account. And if your emergency fund is already where you need it to be, the next thing on your radar should be paying down high-interest debt.

Credit card debt is likely the first thing that comes to mind, and rightfully so as it often carries the highest interest rates of any consumer debt. Get rid of it as fast as possible, but don't be alarmed when your credit limits are slashed in response to paying down balances. Over the last year or so this has become common practice by credit issuers as they seek to lower risk and maintain profitability amid tough economic conditions.

on Sun, 2010-03-07 16:00