The mighty tax refund

Well, I'm getting a big tax refund. And I mean big, or at least it seems to me. I've never had to figure out what to do with this much money at one single time in my life (at least when I didn't have several bills screaming for my attention).

And yes, I know, it's an interest-free loan to Uncle Sam. I realize that, and will be taking steps to fix the problem in the future. (The nice thing is, I can up my 401(k) contributions, and not even notice the difference.) It's just hard to believe (still) the huge tax benefits of paying my mortgage company huge amounts of interest with every monthly payment.

Here's the problem. I know, if I was being totally financially responsible, I'd take the money, put a nice chunk (1/3) into savings (since they are now depleted), and put the rest toward my HELOC. I thought about this a lot.

Then, I decided, I would balance between being completely responsible, and split the remaining 2/3 (after the savings part) equally between the HELOC and some smart financial purchases. (By this I mean that I wouldn't just spend it frivolously on junk, but, rather, well-thought-out and planned purchases).

Unfortunately, in the course of deciding just what those well-thought-out purchases would be, I visited a furniture store to do some research. I spent the drive home adding up the total cost of everything I would like to buy, and trying to justify spending it.

So, now I'm in a quandry. I know what I should do, I know what I want to do, and I'm even considering a middle-of-the-road compromise.

The problem with the only non-mortgage debt being a very large sum is that it is very difficult to see any progress. This is why lots of popular financial gurus recommend paying debt off starting with the smallest balance.

It will be a while before the refund will clear my bank. In the meantime, I'm off to check out some financial sites for a calculator, to calculate the impact of paying a large lump sum. I'm hoping that will get me motivated to make a more responsible decision.