Thursday, February 21, 2008

Five rebate spending tips for tax first-timers

MADISON, Wis. (2/20/08)--It's official: President Bush approved legislation last week that will deliver tax rebates to U.S taxpayers who have filed for the 2007 tax year, and checks will be mailed in late May (Associated Press Feb. 13).

For many young adults, this will be the first time they receive any kind of check from the U.S. government. And young adults filing their first-ever tax return may be getting both a tax rebate and a tax refund.

Faced with the potential for a substantial windfall, what are some of the best ways young adults can put Uncle Sam's check to use?

Pedal power. Spring is around the corner, and the environment is a major concern. Consider purchasing a new bike, particularly if you live in an area where you can commute to school or work with your new wheels ( Jan. 28). You'll save money on gas, get exercise and reduce your carbon footprint. Don't forget your helmet.

Help others. Feeling charitable? Consider donating a portion or all of your new money to a worthy cause. Current economic woes affect charities as well as businesses and consumers ( Feb. 4). Giving to your favorite cause will help others and make you feel warm and fuzzy. A side benefit is that your charitable donation may be tax deductible, which will help if you itemize on your 2008 tax return.

Invest in yourself. Place your refund or rebate check in a savings account, share/certificate of deposit, Roth IRA or other investment vehicle. Whether it's a rainy day fund or a start on a down payment for your first home, your credit union can help.

Act locally. Purchase goods and services within your community. Hire a local painter to fix that failed weekend project in your condo, dine out at a locally owned restaurant, or head down to the local electronics store instead of a large retailer to grab that new video game you've been eyeing. This multiplies the economic impact your dollars have in stimulating the local economy, and in turn boosts the national economy ( Feb. 9).

Knock down debt. It may not be the most exciting option, but it will help you pay off credit cards, student loans, and other forms of debt, putting you in a better position to make big purchases in the future.

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