How to Effectively Spend Your Tax Return

It is that time of year once again most American's will be receiving a tax return. The amounts will vary based upon what everyone made during the previous year, and how many dependents you have. No one knows what the future will hold except for the fact we are in a recession if we do not pull out of this more and more people will become unemployed. I am going to base article on receiving a $4,000 refund.

Gather All of Your Bills

Collect all of your bills that you are behind on, if you are not behind then we can use this money elsewhere. One of the most important this is you should get caught up. Trying to catch up paycheck-to-paycheck is very hard to do. I am putting an amount of $800 down for owed bills.

Pay Yourself

A friend of mine once said 'if you work so hard for nothing what is the point?' I have always believed that you should take 10 percent for yourself, go shopping. Buy yourself whatever your heart desires with that $400. If you are way behind on bills you might want to adjust this number. Having money now might not be worth the aggravation later.

Make a Mortgage Payment

It never hurts to be ahead in the mortgage game. You can use this to pay off principle or just to stay one payment ahead. If you rent hold onto the money for an extras month rent or you can save it, whatever works best for you. I am basing a mortgage/rent payment at $1,100. So far with bills, mortgage, and spending money I am at $2,300.

Save, Save, Save

The remaining $1,700 can be saved in different ways. Open up an account for your kids either for college, a car, or some security for them later on in life. Add as much as you can to their accounts monthly for as long as you can. Invest in an IRA for retirement you will not be able to pull out until you retire or you will have to pays fees (the interest you accumulated). A baby emergency fund would be great to start this will help you in case there is an emergency. What if your furnace goes out, or the dog gets sick? This should just be put in a savings account this way you can get to it fast without paying fees.

If you are prepared you will be one step ahead this will help incase you lose your job or get sick. Building your Family's financial future is crucial in the economy game.