Dear Mary: I just received my income tax refund. At first, I thought of paying off a credit card bill that I have. My daughter feels I should put it into my savings account; she said it is easier to pay bills than to save. What do you think? — Iris


Dear Iris: Well, that all depends. If you have little or nothing in savings now, I agree with your daughter. You need to build up a contingency fund that has enough money to cover your living expenses for three to six months in the event you hit a rough patch on the financial highway. That just makes good sense. You don't know what the future holds, and you need to be as prepared as possible.


If, on the other hand, you already have, say, $10,000 socked away, I'd suggest applying that money to your most troublesome debt — the one with the highest interest rate. Just make sure that creditor applies it to "pay down" the principal, not "pay ahead" the way you would if you were leaving the country for several months and you wanted to make your payments ahead of time. I wish you well on making this very important decision.


I do like your daughter's advice. It IS easier to pay bills than it is to save. In fact, most people find saving money where it actually goes into a savings account to be harder than just about anything!


And here's one from me: It's much harder to work for money you've already spent than it is to save first and spend later.


Dear Mary: I want a new television and found the right one at a price I can pay with cash. The store is offering nothing down, zero interest and no payments for the next 12 months! Should I leave my cash in savings to earn interest and accept their financing offer? — John


Dear John: This is a risky proposition for three reasons:


First, only those individuals with a pristine credit history qualify for those marketing-hype type of deals. Now, assuming you fall into that category, you will have to sign a complete financing agreement that includes an outrageous interest rate. They will tack on a provision that defers (not waives) the interest and payments for the first 12 months, provided you pay the entire balance before midnight on the 366th day — and not one minute later.


If you miss the deadline, you lose your deferment and owe interest back to day one. That is risky because you cannot know where you will be in one year. They will NOT go out of their way to find or remind you.


The second problem involves your freedom to change your mind. This in-place financing arrangement leaves the door open wide for you to use your cash for something else that comes up. You'll be tempted (trust me on this) because you know in the back of your mind that you could turn this TV deal into monthly payments since everything is in place to do that anyway.


The third problem involves your mindset. Signing up for the plan affirms a false notion that it's OK to have things now and pay for them later. A man I know who owns a local mattress store told me recently that 78% of consumers who sign up for these kinds of deals at his store do not pay the balance in full during the initial period. They opt for the long haul to pay and pay and pay those hefty, high-interest payments. And that's exactly what the finance company hopes you will do, too.


So, back to your question: How much interest could you possibly earn on, say, $4,000 (fancy TV!) in one year? At the going rate of 0.80%, if you're lucky, that would be $32. That's it.


I suggest you skip all the nonsense and just pay for that television — no credit report, no credit application, no nonsense. Done deal.


Mary Hunt is the founder of EverydayCheapskate.com, a lifestyle blog, and the author of the book "Debt-Proof Living."