Don’t blow your tax refund on these things

If you’re getting money back, be careful how you spend it

There’s a special kind of excitement that washes over you when you find out you’re owed a tax refund. Thoughts of how to spend it and what to buy rush to your brain, as the money you don’t even have yet is burning a hole in your pocket. We can’t blame anyone for feeling that way!

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But once that feeling subsides, it’s time to get back to reality. Afterall, that’s not free money you’re getting back -- that’s the money you’ve worked hard for and earned. It doesn’t hurt to think of it as an extension of your regular paycheck and not a bonus.

We’ve already given you some ideas on what to do with your refund, so we thought we’d share some ideas on what not to do with your refund.

 

Spend it all at the casino

Gambling is fun and entertaining, isn’t it? It’s also extremely addictive. Chances are if you go to the casino, you’ll burn through your money faster than you can say “Hey, where’d all my money go?”. Once you start gambling, it’s hard to stop. And by starting in the first place, you’re risking the chance of not only spending your tax refund but also dipping into other accounts -- like your checking or savings. Our advice is to skip the casino altogether.

Spend it on things you don’t need

Chances are, if you didn’t need it before the refund, you probably don’t need it now. Of course it’s OK to treat yourself here and there, but in this case we’re talking more about the gadgets and gizmos you want but don’t need. It’s important to not spend money on something frivolous now that has the potential to cause you stress later. Do you really need the latest version of a smart phone when yours works perfectly fine? The last thing we want is for anyone to feel financially stressed out months later when he or she realizes that money could’ve been put to better use.

Make a purchase at buy here, pay here car lots

We can’t stress enough that you should never ever spend your money at these lots. They’re part of a predatory lending practice and consistently take advantage of people who don’t deserve it. Many of the cars they sell are in terrible condition and require many expensive repairs. On top of that, the interest rates on these vehicles are through the roof. You end up paying far more than you should on vehicles that aren’t worth it. And let’s not forget that these places are banking on you to fail so that they can repossess the vehicle to sell to someone else. Our advice: Stay far away from buy here, pay here lots.

Lend money to others

This is a tough one because we know lending comes from a good place. We can’t fault anyone for wanting to help others. But if it comes at the expense of your family, we don’t recommend it. Not only does lending have the potential to put a stress on you financially, it also has the potential to put stress on your relationships. Seeking repayment can become a hassle and can ultimately be the reason why a relationship goes sour. The truth is, you’re responsible for your finances and they are responsible for theirs. If you can’t afford to lose the money, you can’t afford to lend the money.

 

Ultimately, how you spend your tax refund is up to you. We hope you’ll take some time to really plan how you want to spend it and think about ways in which it can financially impact your life in a positive way.

Sarah MillerComment