What to Do With Your Tax Refund or Other “Found Money”

Garrett Planning Network Provides Thirteen Smart Ideas

(Lee’s Summit, MO) February 24, 2008 – After concluding their tax
preparation activities, many people will see that they are entitled to
a refund from Uncle Sam. “Whether you refund is large or small, you are
wise to determine now what you will do when that check arrives,” says
Sheryl Garrett, CFP®, author of Personal Finance Workbook For Dummies®
(Wiley, November 2007) and founder of the Garrett Planning Network (www.GarrettPlanningNetwork.com). “Don’t fritter it away or spend it on a whim.”

On a recent teleconference, network members brainstormed thirteen ways taxpayers can put this “found money” to work:

1. Put the entire amount, up to the maximum allowed by law ($4000
for an individual in 2007 unless you are age 50+, then the maximum
contribution is $5000; $5000 for an individual in 2008 unless you are
age 50+, then the maximum is $6000), into a Roth IRA assuming your
income falls below the government thresholds (the phase out for singles
in 2007 is $99-$114,000 and in 2008 it’s $101-116,000; for married
couples in 2007, the phase out is $156-166,000 and in 2008, it’s
$159-$169,000).

If you are saving for higher education funding needs,
withdrawals of regular contributions to a Roth IRA are not subject to
tax or penalty and can be made at any time, and you can take a
“qualified distribution” (one that is made after a 5 year holding
period, beginning on the first day of the first year for which the
contributions were made), if one of the following applies: (1) you are
a first-time home buyer, (2) you are age 59 1/2 or older (3) the
distribution is due to death or disability. If your earned income for
2007 is higher than the phase-out thresholds, put your “found money”
into another qualified retirement plan such as a 401(k), 403(b) or 457
plan if your employer offers one.

Consider contributing to a
traditional IRA if you have maxed out contributions to your
employer-sponsored plan or if a Roth IRA is not an option.

2. Give the money to charity and you can claim that amount as a
tax deduction on your 2008 tax return, if you itemize using Schedule A
of Form 1040

3. Sign up with www.kiva.org and provide micro-loans to budding
entrepreneurs in third-world countries. If you’re feeling especially
patriotic, you might consider investing in small business start-ups in
the US, for instance: helping a relative by providing seed money for a
local venture.

4. Start a tax-sheltered 529 college savings plan to fund your
own or children’s/grandchildren’s educations. Consider funding an
Education Savings Account (ESA), formerly called a Coverdell account,
if you plan on paying private school tuitions through secondary school.
(Coverdell phase outs in 2007 and 2008: Single- $95-$110,000; Married
Filing Jointly – $190-$220,000)

5. Check that you have adequate insurance coverage on the
following types of policies: property and casualty, life insurance,
health insurance, long-term care and disability insurance. Use the tax
refund money to pay the premiums.

6. Use the refund money to engage the services of an attorney. If
you don’t have a will then have one drawn up. Without a will issues
such as child guardianship and disbursements of assets will not be
decided by you, but rather the laws at the time. For high net worth
families, make sure your estate plan is up to date.

7. Use the money to purchase stock mutual funds at lower prices.
Some funds offer lower initial purchase amounts, especially for IRA’s,
or even lower if automatic transfers are made from your bank account or
paycheck. While the market has been gyrating wildly, there’s never been
a better time to invest. If you have cash sitting on the sidelines, you
may miss the next market upswing. Time in the market matters more than
trying to time when to get into the market. If you are investing for
the long-term, you can’t afford not to be invested in stocks. Remember
the old adage, “buy low and sell high.” Stock prices are low right now.
Consider international as well as domestic opportunities.

8. If you have credit card debt, pay off as much as possible. For
free credit reports go to www.annualcreditreport.com (the only
authorized source for free credit reports). Use part of the money to
obtain your FICO score from this site(the rating that shows how credit
worthy you are). Correct any misreported items and work to keep your
credit reports clean. Make your payments on time and don’t take on more
debt than you should. Try to live within your means. Get help at the
Consumer Credit Counseling center.

9. Mortgage interest rates are the lowest we’ve seen in years. If
you have a good credit score, now is a good time to refinance your
first mortgage and/or to wrap our Home Equity Line of Credit (HELOC) or
second mortgage into a more attractive home loan. Consider a 15-year
loan to accelerate the payout. Get out of variable loans now. Use your
“found money” to pay points and loan costs.

10. During economic slowdowns, including a recession, job losses
and/or business declines are inevitable. Take a course, add to your
credentials and consider how you can improve your skill set to make
yourself as attractive as possible in the marketplace.

11. Schedule your annual check ups with your doctor and your
dentist. Use the tax refund money to pay the deductible and
co-payments. Join the YMCA or the local health club, consult with a
nutritionist, or buy a piece of exercise equipment (and be sure to use
it!). Without your health, wealth is not important.

12. Schedule a financial check up for yourself. Annual trips to
the dentist, the doctor – and your financial planner – are wise
investments. A professional financial adviser can help you see tax loss
harvesting opportunities, assess investment options, analyze insurance
coverages, and plan for a secure retirement.

13. Purchase a gift certificate, for a set amount of professional
financial advice, for a loved one. If you can’t afford or don’t want to
pay for a complete financial plan, find a financial planner who works
by the hour and will render as much help and advice in the time
allotted by visiting www.GarrettPlanningNetwork.com.

About The Garrett Planning Network, Inc.

What: An international network of independent professionals who
offer financial planning and advice on an hourly-as-needed, per-project
and/or retainer basis. No commissions or third-party compensation is
allowed. Now anyone regardless of income or net worth can hire an
independent financial planning professional to help them make better
financial decisions.

Network Founder: Sheryl Garrett, CFP® — author of several financial
planning and investment books including her latest, Personal Finance
Workbook For Dummies® (Wiley, November 2007). Recipient of numerous
industry awards. Profiled in hundreds of national publications
including Wall Street Journal, New York Times, Kiplinger Personal
Finance, MONEY magazine and multiple times on the TODAY show, Bloomberg
TV and Fox News affiliated stations. Named four times to Investment
Advisor magazine’s annual list of the “Top 25 Most Influential People
in Financial Planning.”

Headquarters: Shawnee Mission, Kansas (Kansas City metropolitan area)

Year Founded: 2000

Contact: (866) 260-8400 or info@garrettplanning.com

Web: www.GarrettPlanningNetwork.com

Membership Guidelines: Members pay an annual licensing fee in
exchange for network training, support and participation. Members also
must be CERTIFIED FINANCIAL PLANNER™ certificants or actively working
toward that status, independently registered in the state in which they
practice or with the U.S. Securities and Exchange Commission, and
adhere to a strict code of conduct, ethics and compensation.

Number of Members: Approximately 300 across the United States and overseas, including Lee’s Summit, MO based Kristine McKinley.

Located in Lee’s Summit, Missouri, Kristine McKinley,CPA, CFP®, is a
member of the Garrett Planning Network. Her firm is also a member of
the National Association of Personal Financial Advisors (NAPFA) and the
Financial Planning Association. Ms. McKinley offers a complimentary,
no-obligation Get Acquainted meeting to discuss her services and help
potential clients determine if there is a good fit. More information
can be obtained at www.beacon-advisor.com, by phone at 816-739-4853 or by email at kristine@beacon-advisor.com.