What would you do with tax refund?

[mysonshine]

Would just like some opinions on what you would do in our situation…….

I am soon to be a sahm. Money will be very tight but the stress of the job on our family wasn’t worth it anymore. DH’s pay covers bills, groceries and his gas money for work. That’s it. No extras. Another part-time job may be in line in the near future either for me or DH may pick up a 2nd job so I don’t have to work. But in the meantime……

If we were to get enough back from taxes to pay off our credit card (the balance is pretty high ) would you pay off the cc and have that extra “cushion” each month but have nothing in savings? Or would you save it to have as backup and just keep paying on the cc?

[MaddieMay]

I would set aside part of it as an emergency fund and put the rest of it towards paying off the credit cards.

[katheek77]

I would pay off CCs.

The interest on the CCs is undoubtably more than you would get if you put it in savings, so, you'd "save" money, by putting it into CCs, and then putting whatever you WERE paying into CCs into savings, even if it's only 50 bucks a month.

[aircantu1]

I'd pay off the credit cards and free up that money each month.

[Dragonfly]

Do you have any money in savings to cover an emergency? If so, I'd pay off the credit card. If not, I'd maybe put one month's worth of credit card payments in savings, use the rest to pay the credit card, then finish paying off the credit card with the next paycheck. That way, you're covered if something happens in the meantime and you won't have to build up more debt on the card you've just paid off.

[EmsMom]

Unless you have an extraordianarily low interest rate on the credit card, I would pay off the credit card and then have an automatic deposit from your checking account into a high interest savings account of the amount of money you were paying on the credit card every month. Definitely make it automatic, though, so the money doesn't get swallowed up by other things every month. Also, if it is possible to do so at this point -- have you considered planning to be a SAHM by living on your husbands single income for a couple of months and putting your income towards the credit card and emerengency savings. Knowing it is just temporary for a couple of months more may make it seem more bearable.

[superstella]

I'd say pay off the cc and put whatever you were paying on the cc into savings every month. Even if it's a small amount, at least it's something and you'd be avoiding those high interest charges so in the end you'd come out ahead.

[Savoir Faire]

Well, if you paid off credit, how much cushion are we talking about?

[nd_deadhead]

Good advice so far - but you might want to adjust your withholding so you don't get a big refund next year. Withhold less, and put THAT amount into savings - rather than give the government an interest-free loan.

[phathui5]

I would make sure that you had at least $1000 in savings and then I would pay off the credit card. I would not have nothing in savings, because if your car breaks down or something else happens, you'll be back to using the credit card again.

[Starr]

We should be getting a nice chunk back, thank you adoption tax credit , we are sticking so much into savings and then paying off a loan that is $325 a month. Then we are using the extra money saved from the loan and applying it to something else.

[mightymoo]

I never really do anything with it, it just goes into savings, but we have no debt to pay off.

If you have no emergency fund, I would use it to start a $1000 one, to stop yourself from relying on the credit cards, then I would use the rest if any left over toward the CC debt.

[WhoNeedsSleep?]

We still owe about $5,000 in medical bills from our boys so that is the first thing we are paying off. I don't think there will be any left over. If there is, it's going into savings so we can have SOMETHING for a downpayment on a home.

[~Megan~]

I'd pay off the credit card. If you get that paid off its puts you in a better place financially.

Depending on how much the refund is you could put a bit in savings as well for an emergency fund.

[Happygrl6]

I would put a small amount into savings for an emergency fund, put the rest on the credit card and then, as soon as the CC is paid off, start putting THAT amount into savings each month. Depending on how big the refund & how big the CC debt, I'd put at least a couple hundred, more if possible for the exact reason a previous poster said--if you have an emergency and no savings, you're back to using your CC.

[KariM]

Depending upon the amount of the refund I would either establish an emergency savings account or a combination of emergency savings and pay off debt.

I think it's really important to keep an emergency fund on hand, even if you need to pay off debt.

[Bellejar]

::

Originally Posted by superstella

I'd say pay off the cc and put whatever you were paying on the cc into savings every month. Even if it's a small amount, at least it's something and you'd be avoiding those high interest charges so in the end you'd come out ahead.

:

[wife&mommy]

I would put it on the CC.
We are using ours to pay down our car payment.

[kkfum]

another vote for being sure to adjust your withholdings..we didn't do this and we got a HUGE refund one year. it was ridiculous. we could have had that $$ all along. here's a site to help you figure it out:
http://www.irs.gov/help/article/0,,id=143687,00.html