Using Your Tax Refund

Five Ways to Get More Mileage Out of Your Tax Refund

1. Clear away debt.  Average standard credit card rates are now running from 13% to 15%, according to Bankrate.com, and many store cards are well above 20%.  Paying down your highest rate balances first can help you save substantial interest over time.  Apply for a HCCU VISA Credit Card with rates as low as 9.9% APR to cut down on interest while you're paying back the balance!
2. Begin or add to an emergency account.  Many financial experts recommend amassing at least three months' worth of expenses to offset a monetary setback or unplanned major purchase.  By contributing to a liquid fund such as a money market account, you'll help avoid charging expenses and racking up debt (see above).
3. Invest long-term.  If you have your debts under control and emergency cash on hand, the next best move may be to invest long-term for potentially higher return.  You may want to leverage your investment even more with a tax-advantaged option, such as an individual retirement account or your employer-sponsored retirement plan.  A 401(k) plan that offers matching funds is essentially a source of free money.  Check with your financial advisor to help determine the investment options that are best for you.
4. Remodel to increase your home's value.  Your refund may not cover the cost of a major remodeling project, but consider using it to hire a professional to help determine what upgrades could bring the greatest return if and when you decide to move.  Check out the Cost vs. Value Report 2006 at www.remodeling.hw.net for average amounts recouped.  Be aware that the amounts apply to homes sold within a year of the remodel.
5. Refinance your ARM to a fixed rate.  If you have an adjustable-rate mortgage that's nearing the end of the initial fixed rate period, now may be a good time to refinance to a convventional fixed-rate mortgage before your rate jumps.  As a bonus, you'll gain peace of mind with a fixed rate and may find it easier to budget.