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You’re two days from pay day, have just enough money for gas to get to work, are pulling leftovers out of the fridge trying to invent dishes to last you till you can get to the grocery store, and you turn down plans to go out to dinner with friends. Everyone has been here, the scrape and scrimp survival stage.

Empty Pockets

You swear you’ll be better with your next paycheck so you don’t end up here again.  But then pay day arrives, you breath a sigh of relief, and then promptly forget everything you just went through, well until two days before your next paycheck anyway.

I’ve come to the conclusion that for most people, our financial habits when we are broke are NOT the problem, it’s our financial habits once we have money that cause our downfall. Now that it’s just about time for tax refunds here are 4 tips to use your refund wisely so you can avoid those survival days.

1. Start an Emergency Fund – Even if it’s small at first, $500 to $1,000 socked away in a savings account can mean the difference between an emergency and a financial disaster. If your car or a major appliance breaks you won’t be running to use your credit cards, getting loans, or worse trying to pay out of your paycheck leaving you with a huge shortage and unable to pay your regular bills.

2. Skip The Fancy Vacation & Pay Down Debt Instead – Sure you really want to go on vacation and you so deserve it for working hard all year, BUT you’ll be working so much harder for so much longer the more debt you carry year to year. Go camping, visit family or plan a few staycations instead. Check out for great family-friendly destinations in the Hudson Valley. Once you’ve paid off one debt, snowball that monthly payment into your next debt. Once you’re free of debt, you’ll be shocked at just how far your paycheck can really go.

My Family Trip Planner

3. Stop Getting Refunds – Yes this sounds crazy right? Who doesn’t want that nice sizable chunk of change? It makes us all feel a little like we won the lottery. But that money is yours and you’ve just lent it to the government interest free for a year, while you struggled month to month.

We tend to view lump sums as “extra,” “fun-money” or a “win-fall” that wasn’t earned, when nothing could be further from the truth. You earned every penny of that money and you should put it to work as rigorously as you would your paycheck. Talk to your accountant and human resources department about increasing your withholding so you have more money per paycheck and a smaller or no refund at the end of the year.

4. Pay Yearly Premiums – You often get discounts for paying car, home, or life insurance premiums yearly rather than monthly so why not use your refund to pay cheaper rates for insurance and eliminate these monthly expenses from your budget.

You could also check with other service providers to see if you can prepay your bills for the year for a discount. My husband and I switched our home phone provider to a VOIP (voice over internet provider) and paid $200 for 2 years of service which works out to $8 a month, which is far cheaper than any other plan I’ve found and it has eliminated this monthly expense for the next 2 years.

What do you plan on doing with your tax refund?

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