Or in better semantics, how to not spend a windfall!  Either way you look at it, sometimes we need to treat ourselves to a little something, but other times it's more important to put the gimmes and wantsies on hold and really think about where our money is going and whether we want to throw "found money" after it...or whether we want to be free of the chains debt binds us in.  After all, which would you prefer to do: work because you have to, or work because you want to? 

All too many of us work because we have to.  But if we were to eliminate debts, we could pursue positions in a field we're passionate about, rather than one that brings home lots of bacon to pay that mortgage (and second mortgage) or super deluxe auto payment. 

The following article (reprinted by permission) really caught my eye today because, while the main topic is how to spend (or not spend) your income tax refund, it really applies to any windfall of cash.  Did you receive a refund from your 2006 income taxes this year?  If so, how did you spend it?  We used ours to pay bills and repair a vehicle.  Then we assessed our income tax situation and decided to cut back on my husband's withholding to up our monthly income.  Ask your accountant about doing something similar if you're consistently getting a huge lump sum of a refund - but only if you'll really use the difference for bills or savings.  If you're just gonna blow it, then why not loan it to the government and get the supposed "found money" each year?

Enjoy these tips; I did, especially tip number 4!

Your Income Tax Refund: Sofa, Pecs, or Freedom?

What will your tax refund 'buy' for you this year? A lovely sofa? Perfect Pecs? Freedom?

I hate to admit it, but I almost bought the Pecs. I opened a colorful brochure that caught my eye...

And, there it was... the perfect way to *invest* my refund: in myself -- with my very own home gym! Who doesn't deserve those Abundant Abs, that perfectly Toned and Sculpted Body... All for under $1,200, with payments under $35/month!

I was drooling. I had to have that gym! I deserved it! I'd wanted it for over a year now... Good things come to those who wait, right?

I found some even smaller print at the bottom -- The APR was just under 22%! I exhaled. Slowly. It felt like someone had stopped Bob Seger's 'Beautiful Loser,' right at the best part of the song. The drooling stopped. The adrenaline retreated, waiting for the next spending rush.

My sanity returned.

Still dazed, I followed the efficient-looking tax lady back to her desk, all the while calculating how much interest I would have paid for those Perfect Pecs... those Adorable, Abundant Abs. Just how tired would my bones be by the time I had this home gym paid off?

I didn't even have the refund in my hands yet. But I was holding a brochure that had the power to devour any refund I might have... before it could chill in my bank account.

4 Tips to Keep the Drooling at Bay

1. Decide ahead of time not to spend it. If you later change your mind, ask yourself, "is my *want* important enough to use this lump sum of money?"

2. Tuck it into savings immediately (preferably your emergency account). Or, if that sends you into a cold sweat, put up half of it. Avoid the Money Sponge. Don't be tempted to leave it in the checkbook!

3. Think of your tax return as *Freedom Money*, not as *extra*. Add bits of money to it for a 'Freedom-To-Be-My-Own-Boss' Account.

This is money you've managed to do without over the past year. You didn't miss it then -- no need to miss it once you've tucked it away...

4. Picture yourself debt free... All credit cards are paid off. You have a few thousand dollars in several money accounts. You are contributing to your retirement account on a regular basis. Bill-paying time is stress free. You can go out from time to time, paying cash as you go. Emergencies are covered.

Your money is under control. Your control -- not that of the credit card companies or debt collectors.

Will this year's refund bring you a new sofa, Perfect Pecs, or the Feel of Freedom? You have the *power* in the palm of your hand -- to take a huge step forward in your financial life.

Will you DO it?

Article by:

© 2004 Darlene Arechederra Darlene Arechederra leads the delightful series, "Coming Home: A Woman's Journey to One-Income Living." Women of two-income households who want to find their way back home from the workplace will enjoy this gentle, energizing jumpstart. Visit with Darlene at www.AffordtoStayHome.com/info.htm