NEW YORK (CNN/Money) - It's tax time again, and that's good news for those expecting refunds.

Once the checks start arriving, many people will wonder what's the best thing to do with the money. I'm one of them.

I'm expecting to get about $2,400 back from the Feds and New York State combined. The refund will come in particularly handy this year. As it happens, I'm also changing jobs.

My new position is a good opportunity, although it's a freelance gig -- with no company-paid benefits. So if finances get a little tight during the transition, at least I'll have a cushion.

My original plan was to divide the money by a third for savings, tackling credit card debt, and buying stuff that I both need (new sneakers) and want (a spring trip to Moscow).

It just doesn't seem as fun to spend it on things like, well, rent. Or food.

But with a life change looming, I'm sort of conflicted. Should I use the cash as a buffer between my dreams and reality or just go with my first plan?

If you're trying to figure out what you should do with your own refund, here are a few suggestions.

Prepare for a rainy day. Think emergency savings. According to Jerry A. Barbalatt, a New York-based financial planner, you should have at least three to six months of living expenses in cash or cash equivalents.

If you are in an industry with lots of change or high turnover, six months should be your bare minimum, Barbalatt says.

A cash equivalent includes savings accounts, money market mutual funds, Treasuries, or short-term CDs. Putting your so-called mad money in the stock market isn't so smart, as a down market could wipe out your principal investment and you may not have immediate access to the money.

Nix the credit card debt. Carrying a balance month-to-month, particularly if you have a high-interest card, is a big financial no-no. If you can't pay it all off at once you should consider making a sizeable dent in that outstanding balance.

Barbalatt says this move is a "guaranteed return on your money." Instead of shelling out 15 percent in interest that is money you could be investing, or perhaps spending, elsewhere.

"Plus, whatever interest rate you are paying on your card is not tax-deductible," he added. Another thing to consider before you whip out the plastic.

Add a bigger cushion to your nest egg. Start by beefing up your employer-sponsored retirement plan, if you have one. If your refunds have been roughly the same year-after-year, just divide that by the number of paychecks you expect to receive and adjust your withholding accordingly.

Barbalatt says the benefits are two-fold. First, contributions to a 401(k) or similar account reduce your federal and state tax liability. Also, you may get more company money if your firm does a full match.

Those who already max their 401(k) contributions should also consider opening either a traditional or Roth IRA.

Educate your children. There's a ton of scholarship money out there, but that doesn't mean you shouldn't save anything. And when you consider the average refund for the 2005 filing season is $2,614, up from $2,478 in 2004, you can help send junior off to a school just by socking away your refund money.

"If that is the only bit of money you put away for 18 years or so, that is about $50,000," Barbalatt said. "That is a lot to save for college that would have otherwise been spent without thinking about it."

If you are saving for college you may want to investigate a 529 account. Or, if you are thinking about sending your kids to private school a Coverdell may be a better bet.

Buy your own home. Homeowners may want to sneak in an extra mortgage payment before the year is out, to shave money off their overall interest costs.

If you don't own a home but want to, consider stashing that cash in a money market mutual fund until you have enough for a downpayment.

That's what I am hoping to do with next year's refund -- provided I have a steady job by then. For now, my money is going towards paying my next two months of rent upfront and certain necessary living expenses.