Compared to most other events in an average consumer’s year, receiving a tax refund feels like a cause for celebration. The saying that it is expensive to be poor is as painfully true today as it was decades ago. From unaffordable interest rates on loans to getting your paycheck on a debit card that charges you all kinds of fees when you try to pay your bills to not seeing the slightest increase in your credit score no matter how many consecutive months you pay your rent on time, America’s workforce cannot catch a break in life. A tax refund gives you just enough of a taste of relief to get you through another year of working your fingers to the bone for little reward, that is, if it is not just another trap to get you deeper into debt. If you are not careful, your tax refund can become a Trojan horse that makes your financial situation even worse. For help using your income tax refund in a way that will pay off in the long term, contact an Oakland Chapter 7 bankruptcy lawyer.

Your Tax Refund Can Make Your Financial Situation Worse

You know it is spring when the purveyors of expensive consumer goods start relentlessly advertising their products to people who cannot usually afford to buy them. Many families wait all year for their tax refund so that they can make a major purchase. This is fine if it is something you really need, such as a dishwasher, to make the process of cleaning your dishes more time-efficient. If you can resist the temptation to splurge your tax refund, then do. Whatever you do, do not use it to make the first installment payment on something when you will have to make the remaining payments out of your regular paycheck. Using your tax refund to buy a new car when your current one still functions is a terrible idea. In today’s economy, the tax refund plus the trade-in value as a down payment will still leave you with an unaffordable monthly car payment.

Pretending That Your Tax Refund Does Not Exist is a Wise Move

If you do not make any plans for your tax refund, you are using it exactly for its intended purpose. If you can afford to do so, put it in your savings account and forget about it until next year. Better yet, leave it in your checking account and use it to pay for gasoline, parking, groceries, and your cell phone bill.

Put Your Tax Refund Toward a Debt Avalanche or Use It to File for Bankruptcy

The best financial move you can make with your tax refund is to use it to eliminate debt. Put it toward the cost of a bankruptcy filing or follow the debt avalanche method and pay it toward your debt with the highest interest rate.

Contact the Law Office of Melanie Tavare About Alternatives to Bankruptcy

A debt relief lawyer can help you file for bankruptcy or otherwise use your limited resources to get out of debt. Contact the Law Office of Melanie Tavare in Oakland, California, or call (510)255-4646 for a free case evaluation.