Eye on Your Money: April 30th, 2007

April 30, 2007

Time now for Eye on Your Money with Financial Advisor Bryce Matteson of the local Oppenheimer & Co. Inc. office. This week we're talking about ways to use your tax refund. Many Americans do get a tax refund check. And while we may be tempted to go and spend the money right away, you may wish to consider ways to put the money to work for your financial future.

Here are three ideas:

1. Pay off credit card debt if you have it. Let's say you have $2,500 on a card that charges 18.5% interest. If you only paid the minimum monthly payment, it would take you 30 years and $6,500 dollars in interest to pay off the card. It would be a good idea to use your refund to pay down or better yet, eliminate credit card debt and save yourself hundreds or thousands of dollars in interest by doing so.

2. Invest in an Individual Retirement Account. Even if you already participate in a retirement plan at work, an IRA can potentially give your retirement strategy stronger opportunity for growth. Depending on your income, you may be eligible for a 2007 tax deduction for contributing to a traditional IRA. Alternatively, you may want to consider a Roth IRA, which doesn't allow for current deductions but provides tax-free income during retirement provided certain conditions are met.

3. Use your tax refund is to build your emergency savings account or start one if you don't already have one. Most financial advisors recommend setting aside three to six months of living expenses to cover such emergencies as an unexpected illness or a costly home repair.

Please remember, neither Oppenheimer & Co. Inc. nor Bryce Matteson provide tax or legal advice. Consult with your attorney or tax preparer for such guidance. If you would like more information on these three ideas, please feel free to call Bryce at 371-3636 or 800-735-5461.

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