If you’re like many Americans, you’re getting cash back from Uncle Sam. The question now is, what are you going to do with your tax refund?

Getting a check back from Uncle Sam isn’t much to brag about, you just gave the government an interest free loan by overpaying what you owed. Now, you can make up some of that by making some smart moves with your windfall. Here are some things you can do with your refund check that will payback big time.

First, use your refund to pay down debt. The best debt to pay down is non-deductible debt with high interest rates, like credit card debt. If you have several cards, pay off the one with the highest interest rate first, then work your way down, paying off your auto loan, school loans, other loans and generally as much debt as you can. Aim to be debt free.

Next consider using your refund to fund your Roth IRA contribution for 2004. You can put in up to $3,000 per person, or up to $3,500 if you’re over the age of 50. The cash will grow tax-free forever and you just can’t beat that.

Third, start a college fund for your children or maybe even yourself. Consider a 529 Plan and then compound your savings by joining www.upromise.com and www.babymint.com which contribute a percent of the cost of specific items and services you buy into your 529 Plan.

You might also want to use yoru tax refund to start a house fund. You could use the cash as a down payment on a first home purchase or even an investment property. You could use it to pay for closing costs or moving expenses. Or, you could even build up your cash and use it to renovate your home or do ongoing maintenance.

You’ll never go wrong by using your tax refund to pay off debt, put a few extra dollars twoard your retirement, pay for higher education or invest in your house.

If you want to check on the status of your tax refund, go to www.irs.gov and click on the link on the home page.


For more information on Roth IRAs,click here.

For more information on 529 College Savings Plan, www.savingforcollege.com

April 24, 2004.