Sometime this summer you're going to receive a check in the mail from your favorite Uncle Sam. Have you decided what to do with the money yet? You could simply deposit the money in your bank account and use it to pay the regular monthly bills - or you could choose something special to do with this unexpected windfall.
Bankrate.com, the Internet consumer finance marketplace, has assembled 16 ideas for how you can use your rebate. Feel free to click the Add comments option at the bottom of this story and share your ideas for novel ways to use your rebate money.
- Pay down credit card debt. This may not sound like the most glamorous of options, but think about it. If your credit card is carrying a balance that is subject to an interest rate of 18 percent, that's the rate you earn if you make an extra payment. Eighteen percent in this economy is a particularly nice return on a small investment.
- Open an IRA or deposit the money in an existing IRA. Compounding interest over the years will turn that $300 or $600 into a hefty sum of tax-free or at least tax-deferred money.
- Buy stock. Take a turn with the stock market - free money is the best money to use when investing in the market. Make a little investment for yourself, or buy some stock as a gift for the recent graduate in the family.
- Set up a Rainy Day Fund. Open an interest-bearing account and save the money for an emergency.
- Invest in yourself. Spend the money on something that will improve your efficiency on the job, or a course that will improve your skills. Home workers can consider making that much-needed upgrade to a faster on-line service or a spiffy new printer.
- Buy a computer. With computer prices solidly under $1,000, your tax rebate may go a long way toward making the down payment on a new computer for the family.
- Refinance your house. The closing costs for refinancing are usually fairly small - your tax rebate may be just the cash boost you need to drop that mortgage interest rate.
- Make an extra mortgage payment. Check the terms of your mortgage to make sure you aren't penalized when making an early payment, then consider using your rebate to make an unscheduled mortgage payment, or add the rebate to your next payment. In the long run, you'll save years of compounded interest on the amount which is taken directly off of your loan principal.
- Draw a plan. Have you always wanted to hire a professional to analyze your landscaping or remodeling needs but thought the expense was a luxury you couldn't afford? Put your rebate where your dreams are, and improve the value of the investment in your home by starting a scheme for improvement.
- Increase your insurance deductible. Take that $300 (or higher) rebate and bank it someplace safe, then lop a matching amount off of your insurance deductible. The money is there if you have an accident; meanwhile you'll save money on your insurance premiums.
- Have your automobile detailed. Upgrade the value of your automobile with some detailing. "Getting your car detailed can make a huge difference if you are putting it up for sale," said John Clor, the Detroit editor for Edmonds.com. A thorough job, which costs about $175 for inside and out, can increase the price you get by as much as $1,000, according to Mr. Clor.
- Service your car. Give your car a day at the spa by signing up for an oil change and tune-up. Look into purchasing new tires, or consider getting the existing set rotated and balanced. A well-maintained car will burn less gas and save money in the long run.
- Splurge at the spa. Treat yourself and a partner to a day of luxury at a spa.
- Have a night on the town. Spa not your thing? Try a great dinner and a show for a night to remember, courtesy of the IRS.
- Take a trip. Use your money for a rail pass, or upgrade yourself to first class the next time you take an airplane or cruise.
- Try Canada. Your money will go further in Canada, thanks to the current weakness of the Canadian dollar compared to the American buck. First class accommodations north of the border are inexpensive. From major cities you can fly to most parts of Canada for $400 or less round-trip.
If none of these ideas strike your fancy, how about donating your new-found money? Third Millennium, a Generation X-focused think tank, has created a Web site called www.donaterebate.org, hoping to attract rebate dollars that will be rerouted to the charity of your choice. Particularly designed for those taxpayers who opposed the tax bill that produced the rebate, www.donaterebate.org gives taxpayers an opportunity to finance a worthy cause that they think might be getting the short shrift from the government.