Tuesday, April 14, 2009

When that refund check arrives...

The Squeeze household is happiest in April when it has a small tax refund coming - which means the government didn't hold onto a large portion of our money during the year - or when we have a unsurprising, unsubstantial tax check to write.

This is one of those years, so there won't be a refund for us to spend or save. Which are you doing if a check from the fed arrives?

More people are using their refunds this year to pay down debt, according to a new Associated Press/GfK poll.

The survey found that 54 percent of those getting a refund will use it to pay off credit cards, household and other bills. Only 35 percent said the same thing last April.

Thirty-eight percent of those receiving a refund said they intend to spend at least part of it, but that spending appears to be on the necessary more than the luxury. Seventeen percent said they would use the money for everyday needs such as food and clothing, up from 7 percent a year ago.

Only 5 percent, about the same as a year ago, said they planned to go on a shopping spree.

That frugality might be good news for Americans' long-term financial health, but not so good for the short-term economy. In previous years, tax refunds have helped increase retail sales in March, April and May by 12 percent to 20 percent over sales in February, Internal Revenue Service Commissioner Doug Shulman told AP.

"The tax filing season is its own stimulus to the economy," Shulman said in a speech at the National Press Club. "It helps kick off the spring shopping season and can help kick start the economy."

Which will you do - stimulate the economy, strengthen your own financial status, or both?

13 comments:

Anonymous said...

Only an idiot (which would include 67% of Americans) would go on a spending spree with a tax refund. Lock it up into an IRA or put it away for the kids' college education. Morons.

BarackO said...

I'm just going to save myself some time and effort and mail it directly to 1600 Pennsylvania Avenue, Washington, D.C. I'm sure some illegal immigrant and their 14 children need it much more than my mortgage company or the grocery store.

Anonymous said...

I am adding it to my rainy day fund to boost cash reserves.

Anonymous said...

The h--- with the economy; I look after my own pocketbook; who does if I don't?

Anonymous said...

hmmmmm I don't have any deby to pay down, but other than that, I am going to hold on to my money for rainy days.

Anonymous said...

My Fed and State refunds are going straight to savings. I'm on track for having 6 months of income saved up by the end of this year.

Anonymous said...

I have to pay....for those who dont..

ann said...

Congrats, 9:53! That is awesome. Having a cushion of savings will give you great peace of mind. My husband and I are already big savers, so we will probably spend some, save some. We got a big refund because we purchased a house last year. For those that are spending…what are you spending on?

Anonymous said...

Well... I don't have any debt and now looks like a great time to buy. Prices are still too high at the grocery store for me to splurge all of my tax rebates on expensive French or California wine so I might instead buy something that I don't have yet like a new pair of shoes or maybe a new phone system for my home or maybe I'll take my car in for an unnecessary checkup or maybe I'll buy one of those cheap 4th ward condos or maybe something else really inexpensive depending on my mood at the time. :)

Anonymous said...

This morning I mailed a hefty amount to Uncle Sam and Uncle Tarheel in addition to a quarterly estimated tax payment for 2009.

I relish the thought of that money being used to build roads, bridges and nuclear arms to blow our enemies to smithereens.

silverbird541 said...

Well Ann, my husband and I don't really have any outstanding debt except our home and one of the cars. We too have done reasonably well with saving in the past, not only into 401k plans which both companies match up to a certain point, but also other accounts. We've been trying to spend some here and there to demonstrate confidence in the country and economy and to help smaller companies who are struggling. We've primarily made home improvements: added a planting bed outside with year round color and flowers, added insulation, had a bathroom done, upgraded some appliances, had new carpet brought and installed and new furniture has been delivered. Any new items are stipulated to have been made in the USA. We're very pleased, though I think we may have one or two more smaller projects to do. Now is a great time to buy durable goods. It's also great when you can give any older stuff that might still have some use left in it to someone else in need. So, that's what we've been doing and we couldn't be happier with this decision.

Anonymous said...

Gonna finish our kitchen remodel that we've been waiting on our return to finish, then putting the rest in savings. Spending it just to be spending it is pretty foolish.

Anonymous said...

My husband and I are unemployed so the refund went into savings. It's a hedge against the possibility that my unemployment benefits might end before I find a job, and that he might not have a job by then either. I'd like to say that I'm optimistic that we'll have jobs soon, and can let the savings accumulate, but there's this lump in the pit of my stomach that gets in the way! Oy, his 401(k) is worth 60% less than it was a year ago, I don't have one at all, and we're in our 50's. Yuck.