Making Your Tax Refund Work for You

Tips for using your 2013 tax return money wisely.

When it comes to getting a tax refund, military families are at a distinct advantage — they often can file over the phone or online in a matter of minutes, and the Department of Defense gets paperwork done faster than most civilian companies, meaning military families can get their refunds sooner.

But what is the best thing to do with your tax refund? Do you splurge on yourself? Tuck it under your mattress? Pay off debt and, if so, what kind?

Past-due debt

It's simple: paying bills late ruins your credit score and puts your military future in jeopardy.

So your first choice should always be to catch up on any late payments. Whether you owe a lot, or just a little, and even if it doesn't pay off the whole amount, it shows a good faith effort to pay off the debt.

Credit card debt

Paying off credit cards the usual way—sending in the minimum each month—simply takes way too long. (For example, just $2,500 at 21.99 percent will take more than a decade to pay in full!) Paying down your credit card balance can also help improve your credit score.


This is a great time to build up an emergency savings account to protect you from those unexpected expenses. If you already have that taken care of, you could contribute to/begin some sort of investment and have your money work for you.

Big purchase

Have your debt under control? Credit cards doing well? Have plenty of savings? Then now might be the time to make a large purchase without putting yourself under a pile of debt. Whether it's putting a down payment on a more reliable car, replacing worn out furniture, or other bigger purchases, a tax refund check can help cover the costs. Sure, it might not pay the whole amount, but it can help offset the costs significantly.

Be prudent

Taking into account your financial future is sometimes difficult when presented with money in the present. But something as simple as a tax refund can be a springboard to future financial success, and even eliminate additional points of stress in your life. So use it wisely, and start down the road toward a more secure future.

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