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7 places to stash your tax refund: Smart savings for April

After moving to NYC, I made very little money and had to maximize every dollar I earned. That lifestyle taught me many different techniques on how to save for the things I wanted.

Try not to think of your tax refund as a bonus or free money, because it was your money all along.

Photo credit: londoneye/E+/Getty Images

I know you are excited to get money back, but remember, the government has been holding your money at zero percent interest all year long. In that respect, it is more beneficial to pay taxes all year. Try not to think of the refund as a bonus, because it was your money all along.

Pay off your credit card debt

Before blowing the money on fun activities, think about if you really want to be spending more money on the other things you have already purchased; that would be the interest accruing on your credit card bills. Pay down as much as you can with your refund. Debt causes more problems than just a bad credit score; it can affect your mood as well. The relief that comes from becoming debt-free is priceless.

Add money to help decrease your student loan

See number one, as it is the same as a credit card. Getting rid of the student loan has other benefits; they send you a letter that says "Congratulations! You have paid off your loan." Come on, you want that don't you?

Fund your emergency savings account

I know you are sick of hearing this, but you need one. Things happen, and never at the right time. You need a buffer of savings for emergencies (spa treatments or vacations don't count).

Increase your Roth IRA contribution

This is funded by your after-tax income. It is in addition to what you would put in a 401k/403(b) for retirement. Since you already paid taxes, you won't be taxed upon withdrawal after the age of 59 1/2. It is best to put large amounts in when you are young, but who can really do that? Once you establish an account, you can manage the funds in your portfolio and buy shares based on your deposits.

Start adding money to your child's college fund (529 plan)

What is more important than an education? Start saving for your kids with these plans, which is exempt from federal taxes upon withdrawal.

Make an extra payment on your mortgage

Experts say that one additional payment on your mortgage each year will significantly (up to 50 percent) shorten the life of the loan; that is a big deal. The extra payment is applied to the principal, thereby reducing the overall total interest paid.

Rethink your 401k/403(b) contributions for next year if you are getting money back

Yes, this technically isn't somewhere to stash your cash, but it is something to think about for next year. Max out your retirement plan each year for tax benefits and to create a healthy account to live off of upon retirement.

Check out my other tips for January to March here: http://experts.sheknows.com/user/kristin-hammill

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