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Jewish World Review April 27, 2001 / 5 Iyar, 5761

Patrick Larkin

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Consumer Reports

Pay off debt rather than spend tax refund -- GETTING a tax refund?

Rather than treating yourself to a new car, DVD player, TV, computer or some other shiny new thing, treat yourself to some peace of mind by using the refund to pay off debt.

Too many people look at income tax refunds as found money.

But, hey, this is your money that you've loaned the government, without interest. Now all you're doing is getting it back.

Robert B. McKinley, head of, estimates that Americans currently owe $666 billion on their credit cards.

About 72 percent of Americans are expected to receive a refund, with the average refund being $1,652.

If you're paying 14 percent, 16 percent or more on credit card debt, paying it down with your tax refund is a terrific investment.

And if you'd prefer to use the money yourself during the year rather than lending it interest-free to the government, get a W-4 from your employer and use the worksheet to recalculate your withholding.

You won't get it exact, but as www. points out, better you end up owing a few hundred bucks next April than getting a few hundred back. If you have to pay, you're effectively getting an interest-free loan from the government.

You can now buy U.S. Savings Bonds by having the money automatically taken out of your checking or savings account.

The new program is called "Easy Saver" and allows you to pick the date of the month, how many months of the year, the value, number and type of bonds - EE or I - you want to buy.

- For information about the program, call (804) 697-8959. This is a toll call. Or, you can go to the site on the Internet for information or an enrollment form. You can also call toll-free (877) 811-7283 for the form. For rate information on bonds, call (800) 487-2663.

There will be lots of bumps, but no recession, and inflation should remain muted in the first half of the year, says David Wyss, chief economist at Standard & Poor's.

Federal Reserve interest rate cuts and the promise of a tax cut should boost the economy late this year and lead to stronger growth in 2002 and 2003, Wyss said.

But in the short run, weaker consumer confidence and the down stock market will depress consumer spending and growth of the gross domestic product, he said.

Income growth should slow, along with employment. Unemployment could rise to more than 5 percent by early 2002, with the resulting layoffs making it harder for households to make payments on their debts, everything from mortgages to auto loans to credit cards, he said.

The average American household now owes 107 percent of its annual income, with most of the recent increase from mortgage debt.

Here are some investing tips from Debbie Dye Joyce, Ohio Commissioner of Securities:

- Increase your chances of savings and investing regularly by setting goals. "Research shows that people who set savings goals, on average, save twice as much money as those without a financial plan," Ms. Dye Joyce said.

- Set both short-term and long-term goals.

- Determine how much risk you're comfortable taking and don't exceed that level.

- Study possible investments to determine which products are best for your goals and risk tolerance.

- Stay disciplined.

- When considering an investment opportunity, remember the word "think": an acronym for:

-Treating investment 'guarantees' with skepticism.

- Homing in on your investment objectives.

- Investigating before you invest.

- Not being pressured into a particular investment.

- Knowing how your investment funds will be used.

Patrick Larkin writes for the Cincinnati Post . Comment by clicking here.


© 2001, SHNS