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									Tax Refund Dilemma: Save, Spend or Reduce Debt
Wednesday February 25, 2009 - 14:56 PM EST

Source: Business Wire News Releases
Author: Money Management International

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If you are like many Americans, you are probably anxiously awaiting your tax refund from the Government.
While your annual tax refund may look and feel like free money, it's not. You worked hard to earn every
penny of your incomeâ including your tax refund.

This year's tax refund dilemma may be weighing heavily on the minds of many taxpayers. Several hundred or
thousands of dollars could make a big difference for many families who are struggling to make ends meet. At
this point, it's pretty obvious that the economic downturn is not going to be a temporary struggle. It's
important to carefully consider all financial decisions, including how to make the most of your refund. Before
making any hasty decisions concerning your tax reimbursement, consider the following suggestions offered
by Money Management International (MMI):

Save - Analysts believe hard times will persist in 2009. In fact, the current financial pressures are said to get
worst before they get better. Placing your windfall money in a savings account could be the difference
between a financial setback and a financial disaster. Besides, you work hard for your money, so make your
money work hard for you. Depositing $2,000 into a savings vehicle that earns 8 percent interest can really add
up. After 5 years, it will be worth $2,939. After 10 years, it will be worth $4,318.

Spend â After months of living frugally, it might be tempting to splurge and may even feel a bit more
acceptable. If you choose to spend your refund, spend smart now for big savings later. Upgrade your
appliances to energy-efficient models that can lower your electric, gas, and water bills and save money in the
long run. Complete car maintenance and home repairs to help add value and preserve the life of your

Reduce debt - Reducing your debt allows you the freedom to make smart future financial choices. For
consumers struggling with credit card debt, using a refund to accelerate debt payments is an easy financial
decision. If you pay the minimum monthly payment of 4 percent on a $6,000 credit card debt with an 18
percent interest rate, it would take more than 13 years to repay. In that time, you would pay more than $3,500
in interest charges.

"If you're tired of facing the 'tax refund dilemma,' consider reducing the withholding on your W-4 and see
more money on your paycheck," said Cate Williams, vice president of Financial Literacy for MMI.
"Calculators at can help you figure your appropriate amount. Just think, if your refund this year
was $2,000, you could have increased your take-home pay by $167 a month."

About Money Management International

Money Management International (MMI) is a nonprofit, full-service credit-counseling agency, providing
confidential financial guidance, financial education, and counseling services; including housing counseling,
bankruptcy counseling and education, and debt management assistance. MMI has been helping consumers
trim their expenses, develop a spending plan and repay debts since 1958. Counseling is available by
appointment in branch offices and 24/7 by telephone and Internet. Services are available in English or
Spanish. To learn more, call 800-762-2271 or visit


Money Management International
Tanisha Warner, 713-394.3202
Media Relations

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