Sunday, February 14, 2010

Tax Refunds

It has been quite some time since I have updated. Broken computer, dead computer, new computer, new job...yada, yada, yada. Suffice it to say, life happens.

With the passage of time, I have updated my debts. My new debts, which are twice as high as the last time I posted, are not all bad news. I got a new job that pays almost three times as what I was making before. The downside of that was I had to charge a lot on my credit cards to make it through the unpaid training. A small price to pay for the pay increase.

This is where we segue into the tax refund. I have gotten my refund check. With it brings many dilemmas and much debate. My thought was to use it to pay down a HUGE portion of my debt, leaving about $1000 left to be paid by the end of the year. My intial plan was to pay the debt off by the end of the year anyway. Using my tax refund would just make my montly debt repayment amount MUCH smaller.

The debate portion comes in because many experts suggest that you should strive not to get much of a tax return at Uncle Sam an interest free loan and all that. While that does make a lot of sense, I'm not sure it would work for me. For me, the peace of mind I get from putting a large sum in savings and/or paying off debt, is worth the loss of interest. I would be concerned that I would nickel & dime the increase in paychecks away.

What are your thoughts? Do you prefer to get a tax refund or do you favor increasing your withholdings to get an increase in your paychecks?
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