Spend Your Tax Refund Wisely

Peggy R. Anderson

Extension Agent

January 18, 2012

County Fair 2012

Five months from now we’ll be getting ready for the Burke and Divide County Fair, can you believe it?! I just wanted to give everyone the heads up that now is the time to either start or finish up some of those projects at home and bring them in to the open class division of either the Burke or Divide County Fair. Both will be held on the weekend of Father’s Day. Details are pretty limited at the moment but that’s a weekend you can put on your calendar.

The Divide County FCE Council has decided at their Fall Council Meeting to have a couple of special prizes. The first one is a knit or crochet afghan and the second one is a plate of muffins, 4 of any kinds. So folks get out the knitting needles and/or crochet hook and find your favorite afghan project, dig in your stash of yarn, don’t we all have one? Or better yet find some new yarn and get ready for a cold winter month of knitting or crocheting!

As soon as I hear from our Quilt Guilds I will let you know what those special prizes will be.

Spend Your Tax Refund Wisely

Before you receive your tax refund this year, make a plan for how you will spend it.

“Without a plan, you may use the money on the first important thing that comes to mind and then later realize something else was more important,” says Debra Pankow, NDSU Extension Service family economics specialist “Whether your tax refund is $500 or $3,500; it can have a real impact on your personal and financial well-being.”

Here are some smart uses for your refund:

* Pay off your bills: First, pay off monthly bills for services such as utilities or phone if you have gotten behind in making payments. Then pay other bills, starting with those that have the highest interest rates.

* Save for needs in the coming year: Try to save enough to cover a couple of months of expenses in case you have an emergency, such as major medical expenses or car repairs, or you lose your job. Also save enough money for large expenses such as holiday spending.

* Save for long-term goals: Save for goals such as a home, retirement or dream vacation. Small amounts add up. Putting $500 a year into an IRA can yield $68,100 in 30 years. Also, check into whether you may qualify for a tax credit.

* Make special purchases: Once you have paid off bills and put money into savings, then you can consider buying that new refrigerator, TV or sofa.

If you receive a refund each spring and get caught up with your bills only to fall behind again until the next tax season, you have a couple of options:

* Put more money into your paycheck by changing your withholding form (W-4) and claiming more exemptions.

* If you qualify for the earned income tax credit, request that you receive part of it throughout the year. To do that, ask your employer for Form W-5.

Also, avoid wasting part of your refund on loan fees through a refund anticipation loan (RAL). That’s a short-term loan secured by a taxpayer’s expected tax refund. RALs come with extremely high interest rates, and if you don’t receive as much of a refund as you were expecting from the IRS, you still will be stuck having to repay the loan.

Although RALs provide a fast cash loan in a day or two, having the IRS refund deposited directly into your bank account takes only about seven to 10 days.

If you really need your tax refund money immediately and can’t wait for your refund, you have some alternatives that are less expensive than RALs. The options include short-term loans from family or friends, credit union loans or credit card cash advances.

For more information from the NDSU Extension Service on spending your tax refund wisely, visit www.ag.ndsu.edu/money/smart_uses_tax_refund_10.pdf.

Schedule

Wednesday, January 18 – Burke County

Thursday, January 19 – Divide County

Friday, January 20 – Burke County

Monday, January 23 – Burke County

Tuesday, January 24 – Divide County