5 ways to make your tax refund really pay off Don't confuse the IRS with Santa Claus. New toys may tempt, but you'll benefit more if you pay down debt, take care of long-delayed expenses or invest in your finances or quality of life. For a lot of people, the end of tax season is the financial equivalent of New Year's Day. Tax-wise, you've put the old year to rest (or gotten an extension), and now it's time to make some financial resolutions for the coming year -- contribute more, withhold less and lose some of the debt you gained this winter. Your abs may not be firm, but at least you can get your finances in shape. And what better way to start the financial New Year than to make the most of your income tax refund? According to the IRS, some 94% of Americans filing this year expect to get one, and for those who qualify, the average amount they'll get is around $1,700. But even if you only get back $500 this year, it's worth considering how powerful this little windfall, or others like it (a parental gift, a bonus) can be, if you invest wisely. Invest! In this market? Don't panic. If you're not ready for Wall Street, there are plenty of creative ways to invest that money in yourself, your family, or your future comfort and well-being. "Rates of return are important, but so is comfort in life," says Dale Boushley, a financial planner based in Glendale, Ariz. "Are you pinching so hard that you're only going to enjoy life when you retire? You can't stop saving, but you can't stop living either." 5 ways to cash in Here are some suggestions for using your refund so you can live a little: Pay down debt. If you owe money on your credit cards, it may feel depressing to use your refund to pay off just a portion of that seemingly perpetual debt burden. Wouldn't it be more fun to go shopping? But if you're feeling practical, and especially if you're paying interest rates along the lines of 18%, this is one of the smartest things you can do with an extra few hundred dollars. If you were to invest the money, you couldn't expect to earn anywhere near 18%. So paying down your debt is like getting a risk-free 18% rate of return. Do some preventive maintenance. Take a long hard look around the corners of your life. Are there some minor repairs you could make today that would spare you a much bigger expense down the line? Make a list of all the little things you tend to avoid because you don't have the extra cash -- because now that you do, you can: Pump out the septic tank, get the roof fixed or touch up your home's paint job. Visit the dentist Take the car in for new tires or a tune-up Join a gym or sign up for an aerobics class. Make a plan. Find a financial planner to help you create a long-term investment plan and learn how to manage your money better (hey, we all can learn). Invest in investing. A safe, easy and inexpensive way to learn more about how money works is to take your refund and start an investment club with a few like-minded (and cold-footed) friends. The National Association of Investors Corp. ("Investment Education for Investors and Clubs Since 1951"!) has a Web site where you can learn how to structure your investment group. And give it a decent name. Investment club sounds a little "Beardstown Ladies" for me. Call it your Portfolio Development Group, or the Mutual Fund Explorers Meeting. Upgrade your quality of life. It's tempting, when you know that a windfall is coming your way, to daydream about all the wonderful things you could get. Those boots you wanted! The new mountain bike! But getting a refund isn't the grown-up version of a visit from Santa. Before you go on a spending spree, think about what would really improve your quality of life. Take a cooking class instead of celebrating at a four-star restaurant. Or junk your old, overstuffed organizer and replace it with a Pocket PC or Palm. Think about things where the thrill (never mind the Blue Book value) won't be gone in a week, and you can get a real return on your investment. Avoid a refund next year Finally, one thing to consider, especially if you are getting a substantial refund this year, is whether it's in your best interests to get one next year. Sure, it's nice to have a spontaneous chunk o' change drop into your lap, but why let the government keep your money, interest-free, for a year? It gets enough of your paycheck already. If you trot down to your payroll department and change your W-4 withholdings so that less goes to the IRS and more to you, you could have an extra, say, $50 to $100 a month at your disposal. It doesn't sound like much, but even a little extra can enrich your life.