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Let’s be honest, talking about taxes is about as painful as a root canal…unless you are getting a tax refund! Then the conversation has a much lighter tone and often turns to “what can I spend my refund on?”

Here are some top considerations for spending your tax refund wisely:

Pay off debt.
As Americans, we are ASSET RICH and CASH POOR. We have lots of “things” to show for our hard-earned money like cars, homes and jewelry, but would struggle to come up with a house payment if we lost our jobs or had a medical emergency.

Annual percentage rates on credit cards hover around 15 percent, but can get up to 25 percent or higher, and this amount accrues monthly based on the amount owed. That means a credit card with a relatively low balance of $2,000 with a minimum payment of $75 per month will end up taking you more than 26 payments to pay it off, not including accrued interest charges of several hundred dollars that can add months and sometimes years to your repayment schedule.

Save for emergencies.
Accidents or emergencies are simply that…unplanned happenings that are a part of living. A study conducted in 2013 concluded that the average ER outpatient visit is $1,233, not including any lab work or diagnostic testing. Sure, $1,233 doesn’t sound like a lot, but if you don’t have it, it can seem like a fortune. That’s why renowned moneymen like Dave Ramsey advocate for having a least $1,000 in your emergency fund and another 2-3 months salary in savings in the event of job loss or medical issue preventing you from working.

Another benefit of having access to emergency cash is the ability to negotiate with healthcare providers when you have cash in hand. Often you can ask for a 10-20 percent discount if paying your deductible or other medical expense in cash.

Reinvest.
Reinvesting not only helps you, but also benefits the economy as a whole. Obviously there are risks involved with investing and we recommend you discuss these with your financial advisor. As a general rule, reinvesting allows your money to continue working for you to create more wealth.

Make a contribution.
Depending on how your Plan is set up, you might be able to make a cash contribution to your retirement plan. When doing this, you grow your available monies for a 401(k) Rollover – if you are considering opening or starting a new business or franchise – as a creditor protected asset (meaning it can’t be seized in the event of bankruptcy).

You should also consider the benefits of making a charitable contribution. Not only are you helping out an organization who helps others, you also get the benefit of a tax write-off on next year’s taxes.

Spend it.
Many people – dare we say most? – spend their tax refund. Spending these funds is not inherently bad. Using your tax refund to remodel your kitchen, for example, increases the value of your home and can help you sell your home for more money. And, if you’d rather spend your tax refund on a vacation, go ahead and do it. Enjoy yourself!

The point is this: you’ve got lots of options when it comes to how to best utilize your tax refund. We recommend making a list of your ideas and discussing your options with a CPA.