Tax Refund Help

[sbcalimom]

I'm cross posting this since I know some WIR readers don't go to YM.

So we got our tax return direct deposited today and I'm not exactly sure the best way to use it.  We usually get a smallish refund due to the child credits but this year it is bit more substantial due to a cross-country move we were able to deduct.  

Here's the refund details:

Refund: $2594

Set aside $475 for plane tickets already planned

Left with: $2119

We have two credit card balance transfers that I could pay off or I could put it all in savings.  We have the following in savings and the two balance transfers.

Balance Transfer #1: $1097.62 at 0% until May - I have been paying $350/mo so it should be paid off in May before any interest starts

Balance Transfer #2: $694.23 at 0% until June - I have been paying $200/mo so it should also be paid off before June

Main EF: $12,210.00 - this is about 2-3 months of normal expenses and probably 5-6 months if we cut everything unnecessary/daycare etc. Given that we have 3 jobs between us, it would also cover 2x that if only one of us was unemployed.

Taxes: $1110.30 - I had set this aside since DH did contract work last year but we obviously don't need it now for taxes.  I'm probably just going to use this to pay my quarterly taxes since I'll be freelancing all year.

General Savings: $5500 - this is for short-term stuff or irregular expenses

What should I do with the $2K??

Option A: pay off the $1800 in balance transfers and put the rest in general savings.  I could then direct the $550/mo to savings right now rather than waiting until May/June.

Option B: continue to pay off the balance transfers as planned since at 0% and our cashflow is ok.  Put the entire amount of the tax refund into savings, probably $1K to EF and $1K to general.

Option C: ?

Any advice would be greatly appreciated!  Also, I don't know if I'll do anything with our tax deductions for this year since I have no idea how to estimate how much we'll make.  Both my jobs are completely variable and have wide ranges of salaries.  DH probably won't get any contract work this year so his salary is stable.

[emhalf]

Others will probably have better advice, but if it were me I'd probably pay off the balance transfers first. If you didn't have healthy savings, I might say otherwise, but your EF is more than adequate.

If something happens between now and summer that keeps you from paying off the BTs, that has the potential to cost you a lot. You didn't mention what your interest rates are, but I have to imagine that the rates on the balance transfers are significantly higher than any rates you could get from savings right now. So (potentially) passing up additional interest income from savings in favor of protecting yourself from paying credit interest would be worth it to me.

[Rocky Mtn Saver]

If you put the money into a Roth or even a taxable investment account, and then something changes with your monthly budgets, you can always get at that money penalty-free at that point. To me, there's not much sense in paying off free money earlier than necessary.

[❤ mollymouser ❤]

If you need the $$ to help fund Roths, I'd do that.
If not, pay off those credit cards.

(And consider adjusting your withholdings if you don't want to keep getting refunds)