Six Smart Things To Do With Your Tax Refund

By now many of us have received our W-2’s, 1099’s, and other tax forms needed to prepare our federal and state tax reports. The thought of receiving a big tax return can entice many people to spend it frivolously. University of St. Francis associate professor of economics, David Gordon, has a few suggestions for spending tax returns wisely.

“It is always best to prepare your tax forms as soon as all the necessary documents are received,” says Gordon. “If you are entitled to a refund you must decide on how to utilize that cash. These suggestions can help you get ahead in the long run.”

1. Make An Extra Mortgage Payment (Or Two)

Make one or preferably two extra mortgage payments. If you make a few extra payments every year you can substantially reduce the number of years it takes to pay off a mortgage. Depending on the dollar amount and the interest rate associated with your mortgage you can reduce the time it takes to pay off your mortgage by up to 4 -10 years. It will also take several thousands in dollars off your total interest paid on the loan.

2. Pay Down Other Debts

Use your return to pay down other types of outstanding debt especially revolving credit such as credit card bills. The high rates on credit card balances can be quite substantial but you can get ahead by lowering the amount owed with a lump payment of even a few hundred dollars.

3. Pay Your Future Self

Increase your contributions to retirement funds such as Individual Retirement Accounts (IRA). If you don’t have an IRA, this is a great time to open one up with the sum you received.

4. Open a College Savings Account

Build a college savings account for children or grandchildren. The sooner these accounts are started, the more time they have to accumulate returns.

5. Sweat Equity

Use your refund to pay for that home improvement project. Instead of putting that bathroom renovation on your credit card, which will cost more due to interest, set a budget and pay cash. The improvement will also add to your home’s value!

6. Squirrel It Away

Put your refund money in a savings account for a rainy day or next Christmas. That way you are not racking up additional debt during the holiday season.

A last idea that wasn’t suggested by Gordon, but instead, by USF’s Institutional Advancement team… share some of it. It’s much easier to support your favorite causes when you have a surplus. If you think you’d like to support student scholarships or other new initiatives at the University of St. Francis, any gift amount would make a big impact. You can learn about ways to give to USF by clicking here.


Dr. David Gordon earned his bachelor’s in finance, a master’s in business economics and a doctorate in business administration. He has taught at the University of St. Francis for the past nine years and won numerous teaching awards during his career in education.

He is a member of Who’s Who Among America’s Teachers and belongs to numerous professional organizations including the National Tax Association, the American Economic Association, the History of Economics Society, the Southern Finance Association, the Southern Economic Association, the National Association of Forensic Economics and the International Financial Management Association. He has published articles in several academic journals and continues research in the areas of financial economics and forensic economics. His recent articles dealt with the use of second order stochastic dominance in forensic economics and the relevancy of lexicographic preferences.

Gordon also consults in the areas of taxation and forensic economics.