what to do with 5k tax refund?

[jmpellet]

My $5k refund is funding a Roth IRA to be used for college.

 

[ilovemk76]

I'm sorry for not phrasing that correctly....We do have the funds to pay it off if we have to..(emergency fund or heloc) I just thought at 0% that we're not in any hurry...

Bills are paid in full each month...we are slowiy climbing out of debt...husband has been out of work for the last 2 years...so we are living on my income alone...a big chunk of savings have been depleted so i'm trying to not touch it anymore.

We just did a refinance to lower our monthly payment, we could've gotten addtional cash to pay off cc & car...but thought why pay interest on $20k for another 30 years? Also since we can't go completely debt free, i think it's better for my head that I have these debts to control spending too....if that makes any sense...lol

With this update I would put 100% of it against the CC, since you have an emergency fun, and get that CC paid off.

 

[pearlieq]

If you can absolutely trust yourself not to touch it, I would stick it in the EF until just before the 0% expires, then use it to pay down the debt assuming no crises have come your way and you've been able to maintain your EF.

Playing CC balance roulette is a dangerous game. There is no telling what your situation or the credit market is going to be like in the future.

 

[amylevan]

If you dont expect to be able to pay off the CC when the 0% expires, I don't even know how this is a question - put it towards the CC.

 

[rainynight]

Put it towards the credit card debt.

 

[4HppyCamprs]

I agree with the previous posters who said that you should put the money in the ER fund or regular savings until it is closer to the time the 0 financing expires and then pay that off or pay as much of it off as you can with the 5,000.

A HELOC is not the way to pay off unsecured debt like PP said. You would be trading unsecured debt for secured against your home debt. If a emergency really does arise then it become a very scary situation.

It is hard not to do something fun with the money but 6,000 is not much and it can go very very fast.

 

[hsmamato2]

(I'd be tempted to pay the credit card bill - 0% often bites you in the butt - then pay it off as fast as you can and move to "no credit card debt" - its the first step in being debt free - and that changes your life in ways you wouldn't believe.)

Pay the cc bill,and then don't run it up again...IDK how much that is....but any left I'd plop into a bank account for emergency fund, it's wise to have 6 months of savings just in case anyway....

 

[hsmamato2]

The only reason I'm even considering sending him again is that this will be his last year, he will be aged out next year.

I'm gearing splitting the $5k between car loan and cc debt. We won't be able to payoff cc loan by 2014 but will find another 0% transfer.

Ok.... It sounds to me like
1) you can't afford 6k for summer camp ...because....
a) 5000.00 is not enough to pay off your cc debt.
And....if you don't have6 months savings (it's a good goal),and a 4 year car loan (I know,low interest) plus over 5k in cc debt (It doesn't matter what your interest rate is if you can't pay it off) then IMHO that tax refund could be wisely used to pay down the cc...and not an optional camp.(6k? OMG)
OP, you do understand that those 0% deals are not a good deal? you pay a large chunk of money for the privilege of having that rate,then if you add ANYTHING to that amount transferred, you pay even more? So it's like a holding pattern....I know I;ve paid like 3% to get a transfer/0% deal...not cool...
what I'm saying is you might be able to drag get yourself out of that holding pattern....

 

[trewin]

I haven't read all the responses so somebody else may have said this already:

Pay off that cc!!! We had one @ 0% for a year. A 3000$ balance. I had $70 left at the end of the year that I was gonna pay the next month. When that one year mark was up, they added ALL the interest I would have incurred had it not been 0%.
Thankfully, They let me pay the $70 and erased all the interest. I about had a heart attack. Lesson learned!

I'd save the rest.

 

[MrRomance]

Paying down debt is usually the best bet. Unless you know for sure that you will clear your credit card debt before the interest kicks back in in 2014, I would pay that down. If you are confident you can pay that off before you incur interest and you're not having difficulty with your car note, I would pay down your mortgage or buy an asset that puts money in your pocket.

I am in a very similar situation at the moment, I just received a compensation payment after a car accident. I sometimes think it's harder when you have extra money than when you don't, because you have to make smart decisions!

My figure is much higher than yours, but trying to decide how best to use the money is tough. I have no debt mainly because I have struggled to pay it all down and off over the last year or 2. When I didn't have extra money, I always wanted it and "knew" what I'd do with it if I had it. Now I have it, I have no clue how to invest it for the best return!

 

[wiigirl]

Pay down debt and save.

 

[Golf4food]

Use 10% for something fun.

Put the rest to any combination of the other debt/savings items.

Lastly, fix your dang W4 so you aren't giving the government $6K interest free this year. That's like getting a $500/month raise in your paycheck each month. I think you could handle your $500 better each month than they can.

 

[sarah4770]

If your husband does not have a job, its probably a good idea to reduce debt and save some of it. I definitely would not spend it on camp. You don't know what your son's needs will be in a few years. We all want to do what is best for our children,I completely understand that way of thinking, though in this case, teaching him it is ok to spend that kind of money when dad does not have a job, might not be in his best interest.

 

[HerRoyalHighness]

Remember you're teaching your kids what to do here.

But my opinion...teach them patience and show how great it makes you feel to get rid of debt.

 

[JoiseyMom]

Only you can decide what you want/need to do with your money.

And to those saying 6k is expensive for camp, well yes, but depending where you live that is standard. The day camps where I live are about 5k for the summer. My bff pays more for her kids in Long Island. And if you do the travel programs...ouch! Sleep away camps are about 10k for 8 weeks, they are insane.

When I lived in Brooklyn 20 years ago, camp for both my sons were about 1k or so. The first summer out here I was floored by the cost of camps, and they have only gotten higher.

We are getting back more then OP in our refund and it is going towards our vacation , as it usually does .

 

[viaggiamo]

I would also pay down the CC debt. Peace of mind is the best investment ever.
Then I would adjust your tax rate to have the extra $ in your pocket each month and put that off the CC as well until it is paid off in full.

 

[cassandrap83]

emergency savings
retirement
portfolio

 

[ICF]

Pay off the CC debt.

Also, if I had that amount of CC debt (even at 0%)--there's no way I'd be sending my kid to a sump camp for $6K.

 

[TnTWalter]

can use that money in your monthly budget. Your goal is to be as close to net 0 at the end of the year. 0 owed and 0 getting back. Remember it's your money. It's not a gift from the government. They've enjoyed it interest free for the year.

Pay off debt with this year's $5k.

Good luck.

 

[Jillscabanastories]

That's kind of hard to answer as without knowing balances, but here's what I would do.

1. I would pay off the credit cards, then probably cut them up or have them sitting in a frozen block of ice in the freezer for awhile.

2. Put some in the emergency savings fund.

3. Splurge a little with the rest if there is any left.