What are you doing with your tax refund..?

It's that time of year again... tax season... every year at the end of February, Canadians become giddy as they receive their T4s in the mail... chatter of vacation plans, new electronic gadgets, and paying down debt has literally taken over peoples' conversations as of late... sure beats fretting over Libya and rising gas prices at the pump...

Last weekend I got an early jump by downloading the necessary tax software and got my parents' returns out of the way. Curious as to see if I was going to get a refund this year, I decided to at least enter any employment income data I had and go over my stock trading summaries as that task annually takes the most time when doing my returns....

So far, looking good...a refund of $3615.44. Not all of my forms have been received yet as corporations get until March 31st to send that information off; so take away a bit more for dividend income, trust unit payouts, and interest income of $1696.13 for last year so the refund will be closer to the amount of about $3400... less than half of what my refund was last year. But, considering 2010 was another year of heavy trading to try to recoup those portfolio losses from the market meltdown of 2008 and I don't believe in deducting extra taxes off my weekly paycheques, I am pleasantly surprised I am getting a refund at all this year.

This year I claimed the usual dependants of a stay-at-home wife and 3 kids, bank fees & safety deposit box fees, donations to the Breast Cancer Foundation and University Hospital Foundation; union dues, childcare (play-school fees), child fitness credits, RRSP contributions of only $5300 (max), and any Net Capital losses from previous years.

Ideas of What to do with your tax refund:

1. Emergency fund: too many people don't have one..they live cheque to cheque; payday to payday; consider this first... they say 6 months of bills is a good goal to have for an emergency fund; give yourself a small one to start of $5000 to start and stick it into a high-interest savings account. If you already have one, consider adding to it...things have gotten a lot more expensive these days.

2. pay down your debt: credit cards, auto loans, student loans... saving $1000 means nothing if you got $2000 in credit card debt.

3. Invest in yourself: take a course..buy personal finance or investment books... learning more is always a good investment.

4. Invest in your kids... throw that refund into their RESPs... instant 20% return.

5. Contribute to your RRSP or TFSA. Get started on next year's refund by contributing to your RRSP; a TFSA is a great way to invest or use as a emergency fund.

6. Vacation fund: don't you hate going on vacation and coming back home to all the bills; most people book and go on vacation and play catch up later...think about pre-paying for your vacay for a change...

7. Buy an iPad 2... you may not need it but you want it. You worked this hard all year...get something to make it feel worthwhile...

What I'm doing with my refund:

This year I plan to use my tax refund and go party with Charlie Sheen at the Spearmint Rhino! But, I don't think I have enough this year.... especially if Chuck trashes the hotel room again....

Or I could just do the usual....stick it into a high interest savings account to pay my monthly auto insurance premiums and at the end of the year, top off any RRSP contribution room for 2011; and at the beginning of 2012, max out the RESP and TFSAs for the 2012 year if I cannot save up the funds from my job.

Decisions...decisions....