Got your tax refund - Now what do you do with the extra money?

Looking forward to getting your family's tax refund from Uncle Sam?

Then the big question becomes, What do you do with the money?

According to Certified Financial Planner Terry O'Grady, with VALIC Financial Advisors, the average tax refund in 2011 is $2,913.

While it may seem great to get that check in the mail or direct deposited into your bank account, Terry recommends adjusting your W-4 for more accurate withholding.

Here are some other recommendations from Terry:

Waiting to get a large return actually equates into giving the United States government an interest-free loan with your money.

If you do get a refund, the first goal is to make sure you have an emergency fund. It should be 3 to 6 months of expenses.
If you're still paying off debts, a starter emergency fund of $1,000 should be your goal.

Pay off debts using a debt snowball - list debts in order of smallest to largest, not the interest rate charged.

Pay the minimums on all debts with any extra dollars going to the smallest debt until it's paid off. Then take that old payment amount and add it to the next smallest debt. Repeat until you're debt free.

Once you're debt free of everything but your mortgage, make sure your emergency fund is fully funded. Then start saving for retirement.

A Roth IRA can be a great place to put a tax refund once you're debt free.

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