Pay Past, Present and Future with Your Refund

Speculating about how your refund can be best spent can be a fun pass-time almost like considering how you might spend any other windfall that might come your way.  Everyone chimes in with their own wishes:  "how about a new TV or a game system, or paying off debt".  While you want to enjoy a little of the bounty that comes your way, it is also important to balance debt reduction and savings as well. 

Having a plan before the money arrives can ensure you get the best use of the funds.  Without a plan, you may find that in two months that you are not financially better off than you were before the refund.  Our temptation is to spend the money on current wants and desires while leaving debt and savings as they were before the bounty.  This is the year all that changes!

Virginia Saves recommends using the 30-40-30 plan to address your past, present and future with your refund in 2011.  It is a simple plan and works like this:

PAST:  Earmark 30% of all of your refund to debt reduction and catching up on past due bills.  This can be a great way to start power paying your debt.  Power paying your debt can accelerate your journey toward financial freedom and increased savings.

PRESENT:  Dedicate 40% of the refund to current needs and wants.  Need that car repaired or wishing for a new computer?  This is the money that can be used to improve your quality of life right now allowing you to splurge and enjoy some of the proceeds.

FUTURE:  Finally put 30% of your tax refund into a savings plan.  This can help jumpstart that emergency fund or be used for larger purchases later. 

There you have it.  A plan to address past, present and future with your refund.  If you use this plan, you will surely find your future looks brighter.  Don't forget to join the saver's movement at  Together we can make our personal economies stronger!

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