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Page 1 of 3 © 2008 National Financial Awareness Network, Inc.http://www.nfan.com 
 
Smart Waysto Use YourTax Refund
 
Smart Ways to Use Your Tax Refund
We complain about taxes all year, but cheer endlessly when we get a tax refundcheck in the mail. Getting money back from the IRS feels good. Although it feelslike “extra money” in the bank, it’s not. Tax refunds are, and always were, your money. The IRS just held on to it until you file your taxes. Now that you have your tax refund in hand, you should think seriously about what to do with it.According to CNNMoney.com, last year’s average taxpayer refund was $2,548.That may not be enough for college tuition or a European vacation, but it can puta big dent in your credit card debts. This is why paying down debt is the mostpopular use for tax refunds, according to two independent national surveys.Considering the fact that consumer credit card debt is continuing to grow to over $937.5 billion, this is hardly surprising.When asked what they plan to do with their tax refunds, a 2006 taxpayer surveyfrom the National Retail Federation revealed:
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43.1% plan to pay down their debt
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38.6% plan to invest in savings
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26.5% plan to use it for everyday expenses
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13.3% plan to use it on a vacation, and
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11.0% plan to make a major purchaseA TurboTax poll revealed somewhat similar results:
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60% plan to pay down debt, and
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25% plan to put their refund into savingsThe fact that the majority of taxpayers intend to pay down debt or build savings isa great indication of financial responsibility – something American consumersshould embrace. But
 planning 
to reduce debt and actually doing it are twodifferent things. We may intend to pay down our debts once the refund checkarrives, but we still face endless temptations to spend our refunds on other things.So what is a smart way to spend your refund? Depending on your situation, thisquestion could have several answers.
Pay Down Your Debt
Your tax return is a rare opportunity to put additional funds towards paying downsome of your debt. The more money you can pay towards your principlebalances, the better. This is because smaller balances typically accrue smaller 
Page 2 of 3 © 2008 National Financial Awareness Network, Inc.http://www.nfan.com 
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