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Tax time: That interestingly peculiar time of year when ordinarily smart people begin to make really dumb financial decisions. Isn’t it amazing to watch what a little extra cash, okay well for some, maybe a lot of extra cash lining the pockets can do? The average tax refund for 2011 may be a little over $3000, but there has to be several thousand dumb things people are doing with the money at any given moment. I know your pockets are sizzling even as you read, so I’ll be brief and just give you 5 dumb things smart people do with tax refunds.

#1 – Act like its FREE money. The operative word in the term “tax refund” is REFUND! Common synonyms for refund are “repayment,” “reimbursement,” and just plain simply, “money back!” This means that tax refunds are not free money! The government is not giving you a bonus every year just to thank you for being an American. This is money that you’ve allowed them to “borrow” from you all year long. And now, unlike most of your friends or family members, they are actually paying you back. Never mind the fact that they are paying you back with NO interest even though you pay them back with interest on your student loans. . . . I mean, who’s keeping tabs, right?

While you were patriotically overpaying the government you could have been doing a dozen other things with the money YOU worked for, allowing your money to actually work for you. So, for heaven’s sake, please stop acting like April 15th (April 18th this year if you want to be technical) is a damn holiday. Let’s call it what it is: “Happy You Got Played By Overpaying the Government Day!”

#2 – Don’t budget it. The mindset that tax refunds are free money typically leads people who ordinarily utilize a budget, to leave refund money off the financial plan radar. Typically, by the time you think about budgeting it, it’s because you’re down to your last few hundred dollars and all of a sudden want to “be responsible” with it. The reality is tax money should be approached similarly to how you would approach your paychecks; after all, it’s nothing more than the money you really worked for all year long anyway. Even if you apply skewed percentages to determine how you disperse the money, just use some type of logical system! Just running through it and blowing it daily on insignificant and useless purchases is not the way to go. (Disclaimer: For those of you who never budget . . . consult someone who does. Your idea of logical may be a little questionable.)


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