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Best & worst thing to do with your tax refund

Don't Waste Your Money

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The 2014 tax season is finally nearing its end.

That means that if you are owed a refund, you probably have it by now, or are expecting it in the next couple of weeks.

Now comes the hard part: What to do with it once it's in your hands. The average refund is now almost $3,000, according to the IRS, and you don't want to blow it

Save, But Spend a Little

Dreaming of a warm sunny beach? A plane trip to an exotic city? There are so many ways to spend that tax refund.

But before you regret it, Smartmoney.com has listed the following suggestions:

       1. Create an emergency fund, to help pay six months of bills if you lose your job.

       2. Pay off some of your debt, such as a credit card bill with a 20 percent interest rate

       3. Contribute to an IRA or a 529 college savings plan.

       4. Finally, splurge a little bit. Take a short vacation or buy that 50-inch HDTV you've been wanting.

Doesn't That Stink?

But from the "doesn't that stink" file, the worst thing to do with your tax refund.

Bankrate.com says the worst use of a refund is for a short term thrills like a big night out at the bars with friends, or a night at the casino, dropping cash like you are James Bond in Casino Royale.

Next morning you may say "doesn't that stink?"

The Bottom Line

Bottom line: Pay yourself first. Then pay your creditors.

But don't be such a miser that you refuse to reward yourself for a year of hard work.

Spend wisely, so you don't waste your money.
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