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Author: FuskieFool Big funky green star, 20000 posts Top Favorite Fools Old School Fool Ticker Guide SC1 Red Winner of the 2010 Rule Breakers Challenge Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75383  
Subject: Poll: The government is returning my money Date: 3/27/2003 1:30 AM
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Use the $2800 to fund my 2002 Roth contribution
Use the $2800 to pay down my CC and HELOC debt
Save the $2800 to cover my auto and property tax next fall
Use the $2800 to cover closing costs on a refinance of my condo
Use the $2800 to pay down the remaining 2 years on my car lone

Click here to see results so far.

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Author: intercst Big funky green star, 20000 posts Top Favorite Fools Top Recommended Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 35972 of 75383
Subject: Re: Poll: The government is returning my money Date: 3/27/2003 1:40 AM
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I don't have an opinion on how to "use" your $2,800 tax refund, but if I were you, I would adjust my withholding so that my refund is as close as possible to $0 next year.

intercst

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Author: MadCapitalist Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 35974 of 75383
Subject: Re: Poll: The government is returning my money Date: 3/27/2003 10:05 AM
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If I were in your situation, I would take advantage of the allowable contribution to your Roth IRA, since allowable contributions aren't cumulative (i.e. use it or lose it). Don't underestimate the value of tax-free compounding (or the value of not having to pay tax at ordinary income tax rates when you withdraw the money many years down the road).

Then I would commit to not incurring debt to buy *anything* that depreciates (even if you get a great interest of 0%, the natural response is to increase your spending past what you really should be spending). IMHO, debt should only be used to buy a house or to invest in business or investments, and I still would need to be careful to limit the debt so that I don't overspend or put myself in a risky situation.

After making my "no new debt" commitment, I would focus on paying down the credit card debt and HELOC. I actually recommend that you use your emergency savings to pay down the HELOC. You could always use your paid-down HELOC as your emergency fund, and you would save yourself the interest expense that you would have incurred. Even the after-tax interest expense is probably better than the interest you are earning on wherever your emergency fund is now, assuming that it is invested in something very liquid like a bank account or money market account.

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Author: yobria Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 35979 of 75383
Subject: Re: Poll: The government is returning my money Date: 3/27/2003 11:41 AM
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Without knowing the interest rate/balance on your mortgage and the rate on the credit card debt, it's hard to make a recommendation.

>>about $10K in non-retirement investments that could be cashed out (for a loss)

Consider selling your losing non-retirement investments and immediately replacing them with similar securities. Then you can deduct the capital loss against your regular income (max $3K/year) or capital gains (must match short to short, long to long) in this and future years. Easy money.

>>Use the $2800 to cover closing costs on a refinance of my condo
Consider a no-fee refi, in which you pay a slightly higher interest rate in return for the lender paying your closing costs. These have a couple of benefits. First, if rates drop further, you can just do another no-fee refi. Second, part of the lender paid fee will be a month or so of interest on the new loan. This interest will be reflected on your 1098 from the lender, so you'll get a mortgage deduction for interest you didn't pay. At least this is what happened in my case. (Maybe I should have treated this payment as income, but they didn't send me a 1099)

Nick

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Author: FuskieFool Big funky green star, 20000 posts Top Favorite Fools Old School Fool Ticker Guide SC1 Red Winner of the 2010 Rule Breakers Challenge Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 35980 of 75383
Subject: Re: Poll: The government is returning my money Date: 3/27/2003 12:44 PM
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I don't have an opinion on how to "use" your $2,800 tax refund, but if I were you, I would adjust my withholding so that my refund is as close as possible to $0 next year.

Good advice. According to my HR record, I already am. The refund comes largely from deductable interest payments and investment losses.

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Author: FuskieFool Big funky green star, 20000 posts Top Favorite Fools Old School Fool Ticker Guide SC1 Red Winner of the 2010 Rule Breakers Challenge Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 35985 of 75383
Subject: Re: Poll: The government is returning my money Date: 3/27/2003 4:32 PM
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Without knowing the interest rate/balance on your mortgage and the rate on the credit card debt, it's hard to make a recommendation.

Well, there is about $800 on a CC with 7.24% from my Disney trip that has not even closed yet (so I have a month or more before it is due) and about $700 at 6.15% that for which I have most of the cash. Neither of these are lingering debts - I mostly pay off monthly.

Consider selling your losing non-retirement investments and immediately replacing them with similar securities. Then you can deduct the capital loss against your regular income (max $3K/year) or capital gains (must match short to short, long to long) in this and future years. Easy money.

I have thought about that. Last year I rebalanced my investments and moved the assets into funds I believe are well positioned to take advantage of a recovery, so keeping a Foolish long-term view, I am reticent about cashing out until I have to.

Consider a no-fee refi, in which you pay a slightly higher interest rate in return for the lender paying your closing costs. These have a couple of benefits. First, if rates drop further, you can just do another no-fee refi. Second, part of the lender paid fee will be a month or so of interest on the new loan. This interest will be reflected on your 1098 from the lender, so you'll get a mortgage deduction for interest you didn't pay.

I had not considered these aspects. My primary goal for refinancing was to go from a 30 yr mortgage(7 years in) to a 15yr term while keeping the monthly payment about the same. I view the property as a good investment (doubled in value in just 7 years), and wanted to build equity faster.


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Author: billyturtle Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 35989 of 75383
Subject: Re: Poll: The government is returning my money Date: 3/27/2003 8:42 PM
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Good advice. According to my HR record, I already am. The refund comes largely from deductable interest payments and investment losses.

Do you anticipate similar deductions in 2003? If so you can adjust your withholdings. For every $3500 you anticipate deducting you can add another dependant to your W4. Just be sure to estimate well.

billyturtle

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Author: FuskieFool Big funky green star, 20000 posts Top Favorite Fools Old School Fool Ticker Guide SC1 Red Winner of the 2010 Rule Breakers Challenge Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 36131 of 75383
Subject: Re: Poll: The government is returning my money Date: 4/14/2003 2:19 AM
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OK, feeling really foolish right now. The majority of you recommend paying down the HELOC, while a third of you favored the 2002 Roth contribution.

So this weekend I took a look at my 2002 Scottrade statements, and noticed that I opened the Roth account in May, 2002.

Doh!

Stupid.

Let's see - I put $3K into my Roth after 4/15/02. Seems I already made my 2002 Roth contribution, and it has been such a LONG year I forgot when it was.

I already have the cash to pay off the CC debt, so the $2800 will go to the HELOC.


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Author: dsemmler Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 36133 of 75383
Subject: Re: Poll: The government is returning my money Date: 4/14/2003 4:02 PM
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Let's see - I put $3K into my Roth after 4/15/02. Seems I already made my 2002 Roth contribution, and it has been such a LONG year I forgot when it was.

Well, that was a nice little bonus wasn't it! Glad to see that the IRA was funded AND you were able to chip away at that HELOC!

dt

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