The first and most logical way to use your tax refund is to pay off debt. Make a list of all of your debt from lowest amount to highest. Start at the bottom and pay off as much of your debt that you can. This is usually credit card debt. Once you have paid off the devil cards…cancel them! The second best way to use your tax refund is to set up an emergency fund. When you are trying to get somewhere in life and pay off debts, something always sneaks up on you at the most inopportune time. Life happens. You will have your brakes go out, someone will get sick, whatever it is, it will happen. Start by setting up one thousand dollars in an emergency fund. If you have more, add more. Do not put this in an account that you spend money out of on a regular basis or you will spend it. Put it somewhere that you can access it, well, in an emergency. The last way to use your tax refund is to invest it. This is assuming that you have already completed the first two choices. Right now, the investment that is earning the yielding the best return is mutual funds. Get on the internet and research them. Then go to your accountant or insurance agent and discuss it with him. Whatever way that you use your tax refund, make sure to save out a little to treatyourself for being dilligent with your money. Do not keep the credit card accounts open after you have paid them off. Self discipline is one thing, but if you dangle a mouse in front of a cat long enough…it will get eaten.