Boost your finances with your 2012 tax refund

GreenPath counselor Stuart Baker recently took part in an interview with The Mining Journal newspaper in Marquette, Michigan. Below are highlights from the story.

Counselors at the non-profit GreenPath Debt Solutions in Marquette are again offering their annual suggestions for ways to use your income tax return to improve your financial standing.

The counselors said that if you’re like most people expecting a tax refund, you’ve probably already filed your income tax return and may even already have the refund.

GreenPath Counselor Stuart Baker suggests taking some time to put deep thought into the best thing to do with those refunds. Getting a big refund can also be an indication that you may need to change your exemptions.

“Here at GreenPath, we like to calculate how much a tax refund is if broken down into a per payday amount” Baker said. “If you get paid every two weeks, a $2,600 refund calculates to $100 per payday. When we break it down like that, people are really surprised and start to think about making changes.”

Counselors also advise their clients to set aside some of the money, just in case.

“We advise everyone to base their budget on 90 percent of their take home pay with the other 10 percent going to savings. You’d be surprised how much peace-of-mind you can get by having $500-$1,000 in savings for emergencies,” Baker said.

To be in the best possible position, having three to six months of your basic expenses in savings is the benchmark industry experts say you should aim for.

If you want to have the biggest impact on your outgoing monthly bills, GreenPath advises to concentrate on the bills with the highest payment as a percentage of the debt. For example, if you have two, $1,000 balance cards and one has a minimum payment of $30 and the other has a minimum of $20, pay off the $30 per month account.

Another plan is to pay the funds to the smallest balanced cards first, to try to get rid of as many of them as you can. If you have seven store credit cards with balances of $300 and bank card with a $3,000 balance, you could pay off the seven smaller accounts and only be left with one credit card payment each month.

If you’re saddled with high interest rate credit cards, GreenPath suggests focusing on the higher interest rate accounts first. Baker said that way you’ll pay less interest over time.

“If you have two cards with $1,000 balances, one with a 24 percent interest rate and one with a 13 percent interest rate, you’d save over $900 in interest by paying the higher rate card off and paying the minimum on the smaller account than vice-versa,” Baker said.

If you’re not sure which of these options is the best for your situation, consider contacting a non-profit credit counseling agency. Agencies can be located via the National Foundation for Credit Counseling website at GreenPath can be contacted at

-Reprinted with permission from The Mining Journal (Marquette, MI)

Let’s review:

  • Take your time to think about what to do with your refund
  • Do you pay off high interest rate credit cards?
  • Do you put into emergency savings?

And, as always, be a smart consumer!

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