It’s that time of year again. Some people call it, “Black folks’ Christmas.” It’s the time of the year that people are trying to buy and sell social social security numbers. That’s right, it’s tax refund season. You see all the commercials, hear all the tax companies trying to say they’ll get you the biggest refund ever, blah, blah, blah.
But the better question is, what are you supposed to do with that refund? If you do get a refund, it’s widely known that a dollar in the African American community doesn’t stay around for a long time. So, with a windfall of money with your tax refund, many of us start to change our situation IF we change our mindset. So here’s what NOT to do.
1. Get a new car. Income tax returns often mean automobile upgrades. But if the current one was still running fine, why upgrade and get into debt?! If you must buy a car for something important like your job, then buy for it cash. Do not have a car note (I repeat, DO NOT have a car note). If you finance the car, then you are setting yourself up to be right back in the same place that you were before you had this mountain of cash. Trust me, I’ve done it!
Many of you wonder what kind of car you can get with just a couple of thousands dollars–one that’s paid for! There is an old saying that goes, “the best kind of car is one that’s paid for.” So don’t go into more debt trying to buy a fancy car to impress people who don’t even matter.
2. Put the check directly into a checking account “for safekeeping.” This idea started out heading in the right direction, but by putting it in the checking account, it not only does not earn interest, but you put it directly in harms way: yours! Because it’s easily accessible, over time it slowly will be spent on all kinds of unnecessary things until its gone. Instead, put it in your credit union, savings, invest it in a mutual fund or money market accounts.
3. Loan it to family members. When we have more money, many of us tend to feel more generous. But at the same time, old habits are hard to break. So if someone in your family still owes you $20 bucks and now they want you to loan them $150 until next pay day, you may want to rethink that. The best rule of thumb when lending money to family is…