A tax refund can be ideal for paying off debt, building your saving account or replacing an aged home appliance. Unfortunately, it can fund less-worthwhile endeavors just as easily.
While there's nothing necessarily wrong with having some fun with your tax refund, you're almost sure to regret buying anything that offers few long-term benefits. After all, you may not see another lump sum like it for another 12 months - if then.
Here are five questionable ways to spend your tax refund, along with some alternatives designed to help you avoid mistakes.
What's better than getting a sizable tax refund? Making that refund bigger by placing a winning bet on an underdog pony that seems to have an extra spring in its step on race day. But before you place that or any other wager, consider the depressing walk you'll make back to your car if your hopes get ground beneath the hooves of 19 faster steeds.The alternative: If you're dead-set on risking some of your refund, investing in the stock market may at least offer a longer period of suspense. You might also consider a mutual fund if you're able to stomach slightly less excitement. Yes, a party of historic proportions may produce some great memories. But unless those memories are worth the cost of drinks, food and maybe some drywall replacement, it's best to think twice. This is especially true if the memories of your last epic party are somewhat hazy. The alternative: Throw a spring celebration, but opt for a potluck instead. If you know your friends may have received a refund as well, you may go as far as to institute a BYOB policy. It may feel like fate when a flat-screen TV goes on sale on the same day you receive your refund. But it's not. Flat-screen TVs are always on sale somewhere. While the initial buzz of a spur-of-the-moment purchase may be exhilarating, it may not be long before it's replaced by another potent emotion: buyer's remorse.