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by on April 21, 2014 10:49 AM

Discovering that you’ll be getting a tax refund is certainly not the worst news you’ve had in your life. In fact, it’s easy to see a tax refund as some kind of gift from the universe.

But here’s the truth: It’s part of your paycheck that you should have been getting all along. Plan now for how you’ll manage it or your refund could evaporate into thin air. You have options.

Choose well.

• Treat it like a paycheck. Give away 10 percent, save 10 percent and put 80 percent into your household account.

• Stash the whole thing. Your Contingency Fund or Freedom Account — or both — are the likeliest candidates.

• Open an IRA. Any amount will compound nicely. See your bank.

• Invest. Rich people start out as poor people. If this is money you will not need for at least 10 years, put it to work in the stock market.

• Reduce credit card balance. You can send any amount any time to your credit card account. Stop using that card, and keep paying extra until it’s at $0.

• Prepay the mortgage. When you make your next regular mortgage payment, write a second check in the amount of your refund and mark it “Principal Prepayment Only.”

Use the calculators at to see just how this will affect your payback time and how much interest you won’t have to pay.

• Replace a monster. It might be time to replace that energy-guzzling refrigerator or furnace.

• Pump it into your car. You will get more years out of your car if you perform routine maintenance and keep it in tip-top shape. Maybe now is the time to do some of those costlier tasks such as servicing the transmission.

• Build a stockpile. Set this money aside to be used weekly at the grocery store to stock up on “Best Deals.” These are items on sale for which you have a coupon. They’ll be really cheap, so your refund will go a long way.

• Invest in you. Perhaps it’s time to take a personal inventory of your health and wellbeing. What do you need?

A trip to the dentist, a couple of hours with a good therapist, a day at the spa? If that renews your joy, it might be the best money you’ve ever spent.

Mary invites questions at, or c/o Everyday Cheapskate, P.O. Box 2099, Cypress, CA 90630. This column will answer questions of general interest, but letters cannot be answered individually. Mary Hunt is the founder of, a personal finance member website and the author of “Debt-Proof Living,” released in 2014. To find out more about Mary and read her past columns, please visit the Creators Syndicate webpage at
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