Good morning everyone. A couple of weeks ago I wrote a post about 4 things you can do with your tax refund. That article was received pretty well. Today I want to discuss 5 dumb things to do with your tax refund.
Gambling
The first dumb thing to do with your tax refund is to gamble it all away. In my opinion, there is nothing wrong with gambling just a little bit. I’ve been to Las Vegas several times. I also buy scratch-off tickets every once in a while. The problem starts when people decide to spend all of their refund at a craps table or slot machines. The odds of winning are always against you. There are better ways to spend that money than gambling.
Buying too much stuff
The second dumb thing to do with your tax refund is to blow it all on shoes and clothes. I’ve seen it with my own eyes how people can splurge their refund on multiple pairs of Air Jordan shoes and Ralph Lauren clothes. There isn’t anything wrong with buying a couple of items here and there, but it’s just not smart to spend all of your refund on clothes and shoes. Everyone wants to look nice from time to time, but you don’t have to go broke to do it.
Buy a new car
The next thing on the list is buying a new car. Depending on your financial situation beforehand, it is probably not the smartest decision purchase a brand new car. The first reason is that cars depreciate. Another reason that buying a new car with your refund isn’t smart is because you may not make enough money to keep up with your payments. If your refund was only a down payment, you have to ensure that you can afford the monthly payments. If not, your car will be repossessed. Finally, you may not even have enough money to keep the maintenance up. You would have essentially wasted your refund and probably have to sell your car to get something that you can actually afford.
Club VIP
The fourth dumb thing to do with your refund is to buy a VIP table in a nightclub. The tables and bottle service can range anywhere from $500 to over $10,000 a night. Can you imagine spending your refund on a table for just a few hours? I can’t either. I wouldn’t get anything but a possible hangover out of that.
Not saving some of it
The final item on the list is not saving some of the refund. This should have been the first thing on my list. If you get a refund, it should be a no brainer to save a little bit of it. Unfortunately, there are a lot of people that live for the moment and keep nothing. If you receive a refund, you should save a little bit just in case an emergency happens.
To summarize the 5 dumb things to do with your tax refund is to spend it all gambling, buying too much stuff, buying a new car, buying VIP in the club, and not saving some of it.
Are there any other dumb things you can do with your tax refund?
Dual Income, No Kids launched in the spring of 2006 and is now part of District Media, LLC. With over 10 million visitors and syndication on Google News, District Media delivers high-quality personal finance news and advice. Our 58 blogs inform, empower, educate and entertain the public -- free of charge, with all operating expenses financed by advertising.
{ 4 comments… read them below or add one }
All good examples of what not to do. Too many folks think of their tax refund as “blow money”. It’s definitely not. Unfortunately, for some this new money, they don’t know how to handle it. Reasoning takes a backseat to being foolish.
IF we receive a refund, it always goes into savings. I typically play with my deductions throughout the year. My goal is to have the amount I owe or get as a refund as close to 0 as possible. I’m not interested in giving the government an interest-free loan. Don’t get me wrong, I’m all for paying my taxes. Just not keen on free loans. Even though I may only earn 1% interest on that in an online account, it’s still 1%.
Joe-
You definitely don’t want to think that you have more money than you did before your tax refund. The influx of money makes us think that we can therefore afford another subscription box or larger cable package. When in turn, we end up spending the tax return PLUS the extra cost of whatever we bought. Buyer beware of true costs!
We’re definitely saving ours! I’m all about spending money on experiences over things, but really with the VIP table? Craziness!
I actually love scratch off tickets too, but don’t buy them for myself. I do think they’re a terrific gift for anyone over 18 though.