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    From Uncle Sam’s Pockets to Yours: Where the Refunds Should Go

    You can get your income tax refund even faster with direct deposit, and Form 8888, the new IRS form for 2006, allows you to have your refund automatically deposited into more than one account. Typically you can get your refund within two weeks or less by e-filing and having the refund directly deposited into your account.

    What should you do with the stash?

    The National Foundation for Credit Counseling (NFCC) suggests the following tips for managing your tax refund:

    • Avoid refund anticipation loans. These loans are an extremely high-cost bank loan secured by your pending tax refund, which you have to pay back even if you don’t get a refund.
    • Use your refund to pay down credit cards or other high interest loans.
    • Use your refund to pay down your mortgage.
    • Use your refund to contribute to or open an emergency fund. NFCC recommends saving three to six months of living expenses.
    • Use your refund to contribute more to your retirement plan.

    From Uncle Sam's Pockets to Yours: Where the Refunds Will Go

    As April 15 passes by, Uncle Same will be sending out refunds to those who have overpaid on their tax bill. How will Americans be spending the stash?

    A survey commissioned by TransUnion's TrueCredit.com, and which allow allowed multiple choices found:

    • 72% plan to save for a rainy day or other reason
    • 64% say they will buy something they need
    • 41% will pay down their mortgage or other bills
    • 34% will splurge on something fun
    • 28% will take a vacation

    Home-Sweet-Home: A First-Time Buyer’s Checklist

    How do you prepare to buy a house? Here is a checklist, provided by the American Institute of Certified Public Accountants.

    1) Make sure you have a household budget and stick to it.

    2) Create a mock budget for home ownership and make sure you can afford it.

    3) Make a sizeable down payment. Although there are ways to get around that steep requirement with zero- or low-down loans, those options will cost you. With the slowing housing market, having that 20% down payment becomes even more important because you’ll start off with some equity in case you have to move earlier than expected.

    4) Make sure you have a reliable source of income. If you’re in school, plan to go back to school, have a less-than-reliable job or plan to start a family, you need to take a good look at your future cash flow abilities.

    5) Create an emergency savings fund, with enough cash on hand to cover three to six months of your living expenses.

    6) Get your other debts under control. Lenders want to make sure your monthly housing costs—including principal, interest, taxes and insurance—will consume no more than 33% of your monthly gross income; and that your total debt payments, including your mortgage, credit cards, student loans and auto loans, will remain below 38% of your total pay.

    7) Make sure your credit report is in good shape. The government allows you to check your credit history free once a year from each of the three main credit bureaus at www.annualcreditreport.com.

    8) Make sure you are willing to make a long-term commitment. Typically, three to five years is the length of time you’ll have to keep the house in order to recoup your buying and selling costs.

    9) Make sure you are prepared to become your own landlord, with all of the responsibilities, headaches and costs of owning a home.

    10) If you want to do additional research on home ownership, check out the AICPA’s free Web site (www.360financialliteracy.org) on personal finance topics, including articles, calculators and tools you can use to help you on your first home purchase.

    Source: American Institute of Certified Public Accountants.