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Queen of free: Try not to spend refund in one place

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It’s been said, “Only two things are certain in this life — death and taxes.” True, no matter how much we tend to avoid thinking about it, the tax man cometh every April.

If you’re either intentional or lucky enough, you might also have the certainty of receiving a tax refund this spring.

But what should you do with unexpected funds? How can you protect yourself from blowing through it faster than bubbles through a wand in the hand of a toddler on a spring day?

Safety net

Set up an emergency fund. It’s never a question of if unexpected expenses will pop up, but when. You hit a pothole and need a new tire. Your washing machine decides to give it up after

10 years of faithful service. You need a new sump pump. Someone breaks an arm or needs braces.

If you don’t have at least a small nest egg put back for those “little” life hiccups, your financial future is at risk. It’s not fun or glamorous to save money. You probably won’t get the same thrill that spending brings. But you will have security and ability to meet needs when an emergency arises.

Practical purposes

Pay off debt. I know this is a shocker, but I would encourage you to use every single penny you get back from Uncle Sam to pay off debt.

While we typically “break even” and don’t get much of a refund, this has long been our philosophy. This year, every penny we get back will be devoted to giving our mortgage a swift kick in the teeth.

Since you weren’t counting on those refund dollars to maintain your home, you won’t even miss them, plus you’ll lessen the overall interest you’ll pay and shorten the term of the debt.

Don’t run out

Stock up on necessities. Toilet paper, toothpaste, vitamins, cereal ... there are plenty of items we all need daily to keep our households running smoothly. But these small price tag items can add up over time. If you have some extra funds to devote toward purchasing everyday necessities, use them wisely.

I highly recommend using Amazon’s coupons (yes, there are coupons on Amazon) and Subscribe & Save program to maximize those dollars. Be careful to check unit prices when shopping bulk or warehouse stores because it might not always be the most cost effective method of stocking up. Using your tax refund to buy essentials will allow some breathing room in your grocery budget.

Islands are calling

Save it for a long-term goal. Vacations, new cars, furniture or a college education probably can’t be purchased with one tax refund. If they can, you may want to adjust your withholding. However, if Uncle Sam decides to give you some of your dollars back this year, think about saving it for a long-term purpose. A little bit, over a long period of time, yields a great reward.

Treat yourself

Spend a wee bit of it, but set limits. I’m not a total killjoy. Money is a gift and a tool. Sure, it’s not meant to be squandered, but it’s not meant to be hoarded either.

Set aside a small portion of your refund for dinner out or a small purchase. We’re talking pizza or a book, not a porterhouse or a new iPad, though. If you’ve achieved all of the above goals, then sure you can shoot the whole wad, but if not, keep your splurges limited.

Pay it forward

Give it away. How much fun would it be to surprise your waiter with a $100 tip? Wouldn’t the single mom down the street be blessed by a week’s worth of groceries left at her doorstep anonymously?

Whether it’s giving at your church, helping someone in need or doing something nice “just because” consider donating a portion or all of your refund this year. Money loses its power over us when we give it away. Plus being generous is just plain fun.

No matter which path you choose, be sure you have a plan for what to do with unexpected funds. If you don’t have a well-thought-out strategy, the money will disappear into the black hole of your checking account, never to be seen again. May Uncle Sam be kind to you and may you spend your refund well this year.

Greenwood resident Cherie Lowe and her husband paid off $127,000 in debt in four years and now live debt-free every day with their two kids. Send questions, column ideas and comments to newstips@dailyjournal.net

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