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WHAT TO DO WITH YOUR TAX REFUND

Nancy Stark, Consumer Credit Counseling Service   

Last year, the IRS issued tax refunds to more than 111 million people.  Current tax relief strategies may benefit even more of us this year.  If you're one of those lucky consumers slated to receive a tax refund, don't be tempted by high-power ads for big-screen TVs and big-ticket smartphones.

Take this chance to increase your financial security instead. Here's how:

Avoid going on a spending binge. Slow down, and think about the very best way to use your tax refund.

Pay off credit card debt. Using your refund to pay off a balance on a card with an 18% interest rate is like earning 18% on your investments. This represents extremely good value. If you can't completely pay off all your credit cards, at least make a sizeable payment on one with a high rate. That way, you will still reduce your interest costs.   

Create an emergency fund. Many of us don't have money put away for unexpected emergencies.  A tax refund is a great way to start. Then
By doing so you won't lose sleep over unexpected problems, like car or appliance break downs. By placing the cash in a separate savings account or a short-term CD, you'll be less likely to spend it. Building your savings is also wise in case you face economic hardship due to job loss or cutbacks later this year.

Pay down your mortgage. When you make extra mortgage payments, they are applied directly to your principal. By paying off your mortgage faster, you automatically save on the amount of interest you pay. This can result in substantial long-term savings:  By making just two extra payments a year, it's possible to pay off a 30-year mortgage in 15 years.

Invest in your retirement. Statistically, we are living longer than ever before. This means that it will take more money in the bank to finance retirement. In the past few years, many of us also have experienced a downturn in our retirement savings. These factors show the necessity for putting more money away. The sooner you do so, the more interest you will accumulate over the long run.

Pay for necessary medical, auto, or home expenses. If you've been putting off getting your teeth cleaned, having the oil changed on your car, or fixing a leaky roof, now is your opportunity to make these improvements. Paying for necessary maintenance and repair also will save you additional cost in the end.

Invest in the future. If you're saving money for your own education or your child's, consider putting your tax refund in a 529 plan, where funds can grow tax-free if you spend them on qualified education expenses. If you are debt-free and financially secure, consider buying a Saving Bond for your grandchild or making a charitable contribution.

Please call 1-800-642-2227 or visit  www.cccs-inc.org to find out more about the Consumer Credit Counseling Service of MD & DE, Inc.  

Not saving is like owning a Mercedes Benz but having no gas money.  You are going nowhere!  I bet you already figured this out.  I doubt that anyone has been immune to the effects of the financial crisis that continues for so many of us.

Building an emergency account is an absolute must. What should be a reasonable goal then?  I say that if you are a tenant, you must save one month's income and if you are a homeowner, your emergency fund should be at least worth three month's income.  How can you get to your goal?  Easy!  Save 10% of your gross income each pay check.  It will take 10 months to save one month's income. If you say, easier said than done, you are wrong.

I love to save money more than I love to spend it. After all, I work really hard for my money.  I want my money to work harder for me.  Believe me, once you get addicted to saving, you too will say, "I am cheap; and I am proud!"

For starters,  I recommend that your track your expenses every single day.  Pretty soon, you will decide for yourself that packing lunch may be the way to go, or the entertainment costs could be cut down by finding other ways to entertain yourself, or that you don't really need any more clothes or shoes.

Next, take a good hard look at your bank and credit card statement.  You are looking to see where you are spending money.  You should be the one to decide how your money should be spent.  You are also looking for fees and costs.  For example, the credit card bill tells you that if you pay the minimum, it will take forever to pay off the debt, you could pay it in full and find enormous savings, or you could pay an amount that could retire the debt in three years.

Finally, think of small changes that could lead to big savings.  Empty your pockets daily and put that change in a jar. When you use coupons at the grocery store, pay the full price and add the change (coupon savings)  to this jar.  When you make a sacrifice, such as packing lunch, add the amount you would have paid to eat out, to this jar.  Soon, you will get a sense of how much you can realistically save each month.  Then, set up an automatic deposit in a savings account that is your emergency fund.

Visit www.dcrac.org for more information.  

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$nack for a $teal

Easy Classic Deviled Eggs 

6 hard-cooked eggs, peeled and cut lengthwise   

¼ cup Light Mayonnaise or Salad Dressing

½ teaspoon dry ground mustard

½ teaspoon white vinegar

1/8 teaspoon salt

¼ teaspoon ground black pepper

Paprika for garnish

Pop out (remove) the egg yolks to a small bowl and mash with a fork. Add mayonnaise, mustard powder, vinegar, salt and pepper and mix thoroughly. Fill the empty egg white shells with the mixture and sprinkle lightly with paprika.

Cover lightly with plastic wrap and refrigerate for up to one day before serving.

E-mail Tami@dfli.org with a recipe to earn a Purses hour!