It can be very tempting, even for a cheap-skate savings freak like me, to blow that massive tax refund or economic stimulus rebate on stupid crap. Sadly, that’s just what millions of Americans are doing this time of year when those big checks come rolling in from the IRS.

But for those of you out who aren’t content with merely saving that four-figure tax refund for the future, there are several less idiotic ways you can spend that money and derive both an immediate satisfaction payoff and long-term benefits. Here’s a look at some of those ways, starting with the most least stupidest.

1. Save it anyway, dingus. Okay, I’ll make a deal with you. Even though this is supposed to be a list of smart ways to spend tax refunds, I’m still gonna top the list with saving it. But on the flip side, everything else on the list will be pure spending. So this item includes every possible way to save your money including long-term savings, retirement savings, emergency savings, investing, paying down debt, and sticking it under your mattress.
2. Start a home-based business. If you’ve been itching to start a part-time business in that empty room upstairs but the only thing keeping you from doing it is the startup cost, devoting some of your tax return to getting it going can pay off big down the road.
3. Make money-saving home improvements. Switching to new, energy-efficient windows is a smart home improvement that can pay for itself over time. Having your toilet bronzed—not so smart.
4. Fix your car. Bad idea: using your tax refund to buy a new car you can’t afford. Good idea: using your tax refund to fix your existing car so you don’t have to buy a new one for a while.
5. Get cultured. Grab yourself some tickets to a Broadway show, a symphony, or something else entertaining and sophisticated. Or make the trek to Burning Man. Totally your call.
6. Invest in your health. There are a variety of small purchases you can make that won’t necessarily exhaust your whole refund but will help your body and mind in the long run. For example, if you sleep on a bed of straw, upgrade to a decent mattress. Or if your jagged teeth are digging into your brain, go to the dentist. Or if your last vacation was that weekend you spent in jail in Vegas, go on a mini-getaway to a nearby destination to recharge your internal batteries.
7. After much consideration, purchase entertainment equipment with long-lasting appeal. This does not necessarily mean to rush out the door and buy the first giant TV you see. Nor does it mean to buy a 12-speaker, surround-sound, sub-woofing, flux-capacitator sound system. It does, however, mean to buy a Nintendo Wii because it is awesome and everyone should have one, even homeless people. Which leads me to the next item…
8. Give it away. Handing a chunk of your refund or rebate to a worthy charity will not only help someone who might not be getting a refund this year, but it’ll also make you feel really good. And don’t forget to take the tax deduction on next year’s return.
9. Stock the cupboards. Over the course of a few weeks, keep an eye out for incredible bargains at your local supermarket—sales that are designed to draw you into the store to get you to buy other stuff. Then go buy only those bargains… in enormous quantities. Cereal 10 for $10? Buy 100 boxes! Steak for $2 a pound? Buy the cow! You’ll save money as well as time you won’t have to spend looking for deals on those items for a while. Just make sure your family can consume what you buy before it goes bad.
10. And for the eternally single folks out there who, through no fault of their own (*cough*incredible-unattractiveness*cough*), have not found the right person for them, I have just two words: Russian brides. This works for the ladies too; simply request one of the “strong, big-boned” types.

I haven’t been chasing savings account rates as much as I used to lately, mostly because the bulk of our savings is sitting in a nice 9%+ APY 7-month CD that still has a few months left on it. We have since picked up a few more liquid bucks that have been bouncing back and forth between savings accounts averaging only 4.5% to 5% APY, waiting for the next wild deal to appear.

It looks like Wachovia, my banking arch-nemesis, has decided to issue that deal.

I used to have all of my accounts at Wachovia—checking, savings, CDs, safe deposit boxes. Then I realized they were shafting me with sub-1% interest rates and horrendous customer service, so I jumped ship and took all of my loot with me. Now it seems they’re offering a crazy savings account promotion that may even be too much for this hardcore Wachovia-hater to pass up.

More details are available on this FatWallet discussion and this Bank Deals post, but I will summarize:

1. Open a Wachovia checking account and the new Way-2-Save savings account. You need both. Existing checking accounts are fine (including their Free Checking option).
2. The base yield on the Way-2-Save savings account is 5.00% APY.
3. You get an end-of-year bonus of 5% of your balance, up to $300. (Second- and third-year bonuses are 2%.)
4. You can’t just deposit money at will into the Way-2-Save savings account. In order to get money into it, you can: (1) deposit up to $100 a month directly, (2) automatically have $1 moved from your attached checking account into the Way-2-Save account for each debit card purchase, online billpay transaction, or other debit deductions.

So say you have 100 qualifying purchases or billpays or other debits on your checking account each year, and you put $100 into the savings each month. That would be $100 x 12 plus $1 x 100, or $1300. The 5% bonus on that would be just $65, but that’s still a very nice bonus. Even if you don’t do any debit transactions or billpays, you’d still get a $60 bonus just doing the maximum $100 monthly transfers. And don’t forget the 5% APY that $100 a month earns, though that rate could change at any time, in theory.

Just how good is this deal? Well, on a scale of 1 to 50 million, I’d give it a 39,194,942, which is pretty good! I deducted 10 points off the top just because it’s Wachovia, but the rest of my deductions are because of Wachovia’s attempt to get you to use your debit card more. As everyone knows, debit cards are evil and should not be used, even for what works out to be a 5-cent bonus on each transaction.

Wachovia does give you one extra option that could allow you to make up to $300 a year just doing the $100-a-month transfers: you can have up to 5 Way-2-Save savings accounts at once, each hooked up to a separate Wachovia checking account. I don’t know what kind of weirdo has five Wachovia checking accounts, but I’m told it’s possible.

The deal officially starts on January 15, 2008, but some people have reported success opening the Way-2-Save account already by calling their local branch and getting transfered to a call center operator who helped them open the account. I might give this a try with one or two checking accounts to put some miscellaneous funds to good use. I’m just hoping I don’t get the customer service runaround from Wachovia as they were so fond of doing to me.

I was shocked to learn that, according to the results of the last Punny Poll, over 90% of you wonderful readers don’t have a business of your own. Not even a side business! And nearly all of you non-businesspersons have no interest in starting a business ever. Yes, starting a business can take some time; but it no longer takes a whole lot of money thanks to the power of the internet, and owners of even the tiniest of side businesses can earn hundreds of thousands of dollars more over their lifetime than their counterparts who solely “work for the man.”

There’s been a lot of talk lately about finding better places to save your money with high-yield savings account rates dropping and the stock market acting more like a random number generator than anything else. It’s interesting to see where people like to stash their cash, so Punny Poll #25 asks exactly that.

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With internet banks dropping their high yield savings account rates, I’ve been looking for a better place to deposit our savings. I thoroughly considered my own buried treasure method until I realized I don’t have a shovel.

So I started to look around at other internet banks for a better rate. Fortune smiled upon me and threw up a fantastic deal all over me on a 7-month CD with an effective APY of 9.36%. Since first seeing the deal last Thursday, it’s been a crazy ride full of suspense and anxiety to get this CD opened. I thought you might enjoy looking at a timeline of my adventures in rate chasing.

Thursday

1:30pm. During lunch, first saw the thread on FatWallet about a 9.36% 7-month CD at SECU, a small Maryland credit union, starting Saturday and running until whenever.

4:45pm. Finished lunch. Remembered I lived in Maryland!

5:10pm. Filled out an online application for SECU membership. Started second lunch.

Friday

8:30am. Finished second lunch. Received confirmation e-mail that SECU membership application has been received; a form requiring my signature before account opening would be mailed to me.

9:20am. Contemplated transferring savings from current internet bank of choice (we’ll call it Bank of Crap to protect the names of the innocent, crappy bank). Decided against it because Bank of Crap still had a high APY until Saturday.

Saturday

2:50pm. Woke up. Checked the mail. No SECU signature form.

2:55pm. Went back to bed.

Sunday

12:30pm. Sent usual weekly e-mail to Bank of Crap letting them know how much I hate their crappy bank and would leave it if their savings account rate weren’t so high.

4:45pm. Reply from Bank of Crap: “You’ll never leave us, you rate-chasing loser. Har har har.”

6:10pm. Read various responses on the FatWallet SECU CD thread. Lots of happy people with CDs. Some started posting pictures of themselves with their deposit slips. One person named his 7-month 9.36% CD “Franklin.”

7:30pm. Saw the CD listed on SECU’s website. It looked so beautiful.

11:15pm. Cried myself to sleep with no CD to comfort me.

Monday

10:45am. Memories of CD that could have been almost gone. Resigned to let my money sit in Bank of Crap at their new, lower crap savings rate.

4:50pm. Home from work. In the mail: Victoria’s Secret catalog (filed for later), credit card offers (ew, AMEX), and… the signature form from SECU.

5:00pm. Checked online to see if the CD was still available. Saw that CD was pulled from SECU website. Some FatWallet forum members say deal is dead; others: “deal ends Tuesday.”

5:10pm. Called SECU’s 800 number. Operator says I can bring my signature form to a SECU branch location Tuesday to open the CD.

5:20pm. Initiated a wire transfer for full balance from Bank of Crap savings account to my local checking bank. Wire fee supposedly $15. (An ACH three-day transfer would have cost me $23 in lost interest; irrelevant since time was of the essence.)

5:30pm. Read that Bank of Crap’s cut-off for same day wires is 5pm. Crapped my pants.

6:00pm. New pants. Meticulously scoured deal forums for more information on SECU CD. Found a PDF of the CD application; printed, signed, caressed.

7:15pm. A call from Bank of Crap. “This wire transfer… it’s a joke, right?” “No joke,” I responded. From Bank of Crap: “You’ll pay for this, Captain Planet.” Realized entire bank was on drugs the whole time. Worried I’ll never see my money again.

11:45pm. Bedtime. Set the alarm for 7:50am so I could get to SECU when it opened.

Tuesday

7:55am. Breakfast: wife still asleep, so I ate a jar of basil.

8:00am. Checked Bank of Crap. No sign that wire has been initiated. Decided to take my chances and go to SECU.

8:45am. Arrived at SECU branch a few minutes before opening. One person ahead of me; crazy woman mumbling something about “must withdraw, dig hole, bury money, Punny says so.”

9:05am. Met with SECU bank girl. Membership activated. I wrote a check from my local checking account, not sure if they’d verify the funds are in place.

9:15am. SECU girl tried to talk me into opening a checking account. Replied: “Thanks, I don’t even have any money in the ones I have!” Got a funny look back. Crapped my pants in fear.

9:25am. Left SECU, CD opened. Funds weren’t verified. Terrified that Bank of Crap will screw up something and the check will bounce any minute.

10:30am. Still no sign of wire transfer. Called Bank of Crap. Confirmed wire transfer in progress. Could have sworn operator concluded call with “thank you, have a crappy day.”

12:05pm. Local checking account shows wire transfer received. Crapped my pants in relief.

12:30pm. Deal forum members indicated that SECU closed the 7-month CD deal at noon. Rubbed my CD opening receipt all over myself.

Epilogue

A few additional funny moments in this SECU CD comedy:

• Some people on various deal forums were weighing the cost of a round-trip ticket to Maryland just to open the CD versus the interest to be earned.
• Several people out-of-state signed up for Maryland community college classes in order to claim credit union eligibility. Cheapest class found was $12: “TIS THE SEASON TO BE SINGING,” a zero-credit music course. I suspect the entire class will drop before it starts.
• At least one person paid upwards of $70 to FedEx their CD applications overnight. Many of us (myself included) took wire transfer fee hits in the $5-$20 range. Before the $12 community college class was discovered, lots of folks paid $55 to become an honorary University of Maryland alumnus. (They never did anything to confirm my eligibility, but I am a genuine graduate of a Maryland public university.)
• One person considered marrying a UMD alum to get in on the deal. Now that’s creative!

Lesson learned: rate chasing is not for those faint of heart… or those short on pants.

Photo by cameronparkins

Long-time reader and giraffe admirer Lynn recently sent a letter to Punny Money. I ignored it because it was written in lipstick, but then she sent me a check for fifty bucks, so I fished it out of the trash and read it:

Dear Nick,

With high yield savings account rates expected to plummet in coming months, I’m looking for a better place to put my savings. Preferably something FDIC insured with an APY of at least 6.00% or better. Do you know where I can find this?

Thanks, Lynn

Well Lynn, there’s a saying in the banking industry: “Customers are idiots, but we need them if we want to make this whole bank scam we’ve got going work.” So why would banks lower their interest rates since that scares away customers? The answer to that question is surprisingly simple—so simple that I wouldn’t dream of insulting your intelligence by explaining it to you.

Lynn does have a good point: savings account interest rates are dropping significantly. Just last week, major bank company place HSBC announced that it was lowering its high yield savings account’s rate from 5.05% to 4.50%. What does that mean for the typical American saver? If rates continue to drop the way they are, in ten years you will still be poor and have a house full of giant TVs.

The graph below demonstrates an even more alarming trend in savings interest rates. If these rates continue to fall as they did last week, your interest rate will be zero by late November. After that, the banks will actually charge you to keep your cash with them.

So when Lynn asks for a savings interest rate of 6.00% or higher, what she really should be asking for is a safe place to hide her money from the coming bank plundering. Without a doubt, stuffing your money in a sock, putting it in a box, and hiding it in the ground is the best method for keeping your money safe and sound during times of financial meltdown. I mean, it’s exactly what the pirates did in ye olde days of yore. And how many times have you found pirate treasure? Huh? Huh? Yeah, zero. So burying your money is obviously the way to go.

Playing pirate with your savings seems simple, but you’ll need to make sure you follow these steps passed down through generations of my family watching pirate movies.

1. Get a sock. Socks are known for preventing outside crap from getting to your feet. What works for your feet will also work for your money! If you have lots of money, you will need multiple socks or perhaps one really big sock. Use only white socks because—and I’m sure everyone in New York will agree with me—red socks suck.
2. Get a box. A shoebox would be ideal here, but other boxes will work too, including cardboard boxes, Chinese takeout boxes, and boxing gloves. Put your socks in the box, and then have some lox.
3. Find a really good digging spot. You’ll want to go deep into a forest in the middle of the night so nobody sees you. If you can, bring along a friend who doesn’t mind being eaten by wolves. Dig yourself a hole about five feet deep, drop in your socks box, and fill the hole. Make absolutely certain to post a sign nearby stating “No buried treasure here” or else someone might try to find it.
4. Make a treasure map. How do you expect to find your savings without a map to follow? Fortunately the days of scrawling on parchment are over. Just like you monitored your bank accounts online, so too can you track your hidden treasure spots using Google Maps and other internet tools.
5. Bury your treasure map for bonus pirate points.

In ten or twenty years when I’m President and have returned the country to its former economic prosperity, you’ll be able to dig up your fortune and use it to pay my hefty 110% income tax.

What’s that? “What about inflation?” Uh… dig your hole really deep so inflation can’t reach it. Problem solved!