Tuesday, February 19, 2008

How To Spend Your Tax Refund Check

Going to spend your tax refund on a big ticket item?

I've been surprised at the analysis going on by the media concerning how people will put the money to use that the government is supposedly sending to every tax payer. Reports (like this one) that people will use the money to pay bills or pay off credit cards have taken a negative spin on the way that people might use the money.

Does it matter? I say 'no' because people are going to spend money either way. The family that pays off their $1000 credit card bill is going to turn around and probably make more purchases on their credit card. The person who pays their mortgage - well, that gives them the freedom to buy something else. Putting it into savings? While the gov't doesn't want to suggest the savings approach, in the long run, if more people would save the money, the economy will be stronger as a result.

Side Note: To be honest, I would fall into the category that says the tax refund is premature and unnecessary for the current economy. What happens if things actually do get bad? However, I'm not planning to send mine back, assuming I get one. (If you work for the IRS and have time to read this, please know that I am fully appreciative.)

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