5 THINGS TO DO WITH YOUR TAX REFUND/TAX REBATE

With the average individual tax refund over $2200 and most individuals getting an additional $600 tax rebate this year, you may find yourself awash in excess cash this time of year. While hardly a troublesome situation, it does pose the question of “What am I to do with all my extra money?” Before you run out to buy the latest I-Phone or Gucci bag, let me play the role of the little angel-shaped financial guru on your shoulder and offer these suggestions for what to do with your money:

1. PAY OFF DEBT - especially credit cards. How sweet would it be if your credit card company called and offered to cancel $3000 of your balance? You should feel the same satisfaction here; after all, you weren’t “planning” on this extra money, right? HINT: Even if you’re paying on a student loan or mortgage, you’ll save tens of thousands in interest over the life of the loan if you pay off more now.

2. FUND A ROTH IRA – our generation has problems saving money for next month, let alone for retirement, but think of it this way: all the interest earned over the life of a ROTH IRA is tax free! A couple grand a year should mean big bucks by the time you’re 50 or 60. HINT: Find a “no-fee” IRA, which will save you money.

3. BUY A HOUSE – I know what you’re thinking: “I thought Real Estate was in the crapper right now.” Well, that’s only partially true. In some markets that had high run-ups over the last ten years, prices are dropping dramatically. However, in markets that are growing or stable, real estate continues to be a solid purchase, especially when used over the long-term to build wealth. HINT: Rental property can also be a good investment for the right type of investor.

4. SAVE IT! Most financial planners agree to have at least six months of your income saved up for emergencies or large purchases. Need motivation? Just think about the look on the car salesman’s face when you say that you’re paying in cash the next time you buy a car. HINT: Open an online savings account (like E*Trade or ING) to earn better rates.

5. IMPROVE YOURSELF – invest in your career by taking continuing education classes, getting that MBA, or attending a seminar. Studies show that individuals with a master’s degree will earn around $400,000 more over the course of a lifetime than individuals with a bachelor’s degree. HINT: Can’t find the time to attend class? Many schools offer online education options.