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If you are like many Americans, you are already anxiously awaiting your tax rebate from the Government. Retailers, on the other hand, are getting ready to try to part you from that cash. Advertisements will likely try to encourage consumers to splurge with that “extra” money they will receive from Uncle Sam.
Before you blow your tax rebate, consider the following ideas of how to spend your rebate wisely.
Pay down debt. A $2,000 credit card debt with an 18 percent interest rate could take nearly 12 years to repay (4 percent minimum monthly payment). However, if you applied a $1,200 tax rebate, you could repay that same debt in half the time.
Save for emergencies. Americans are currently saving less than one percent of their disposable income. That means that any unplanned expense could turn into a financial emergency. Placing your tax refund money in a savings account could be the difference between a financial difficulty and a financial disaster.
Prepare for Christmas early. Too many people get in over their heads during the holidays and being in debt is no way to begin a new year. By using your rebate for holiday purchases, you can take advantage of lower prices and avoid post-holiday debt.
Grow your money. The eighth wonder of the world is compound interest. Depositing $1,200 into a savings vehicle that earns 8 percent interest can really add up. After 5 years, your $1,200 could be worth $1,797. After 10 years, it will be worth $2,640.
Invest in yourself. You are your most important and valuable asset. Use your rebate to further your education or enhance a skill.
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