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So many people don't understand that if you are getting a big tax refund you are doing it wrong. That just means you paid in advance more than you owe and gave the government an interest-free loan. It would be like paying the electric company $200 every month for a $150 bill then celebrating when they "give you back" $600 at end of year.
It works for some people
The average taxpayer would just **** the money away each month
We don't need the monthly bump. Getting 5k back, pays for our vacation.
Put that money away each paycheck and earn interest on it.
That would be best but I get what he is saying about many people not having the discipline to do that. Maybe the feds should take a few more bucks out and put it into an IRA for them as well.
The average taxpayer would just **** the money away each month
We don't need the monthly bump. Getting 5k back, pays for our vacation.
I can't understand those who don't have the self discipline to save. Just have your pay directly deposited with a certain amount diverted to your savings account.
I would think that those people who are incapable of doing that---and sticking to it--- are going to be having financial problems and living paycheck to paycheck their entire working lives.
And will be in for rough going when they retire. SMH
That would be best but I get what he is saying about many people not having the discipline to do that. Maybe the feds should take a few more bucks out and put it into an IRA for them as well.
I have the discipline But with interest so low, there is no incentive to put it into savings. For us, it is a painless and mindless way to cover our vacation. (We are lucky that we have saved enough that we don't need the extra money monthly and I don't want to pull cash out of investments to cover a recurring yearly expense)
I have yet to understand how the national conversation isn't about the change in net tax burden. If you want a higher refund, just add it to your W-4. Believe me, the IRS loves holding your money (although too much and they might audit you).
I have the discipline But with interest so low, there is no incentive to put it into savings. For us, it is a painless and mindless wa)y to cover our vacation. (We are lucky that we have saved enough that we don't need the extra money monthly and I don't want to pull cash out of investments to cover a recurring yearly expense)
You really see no incentive in you holding possession of your money that can be accessed at any time versus the government holding possession of your money that can only be accessed at end of year by filing a return? You already said you had the discipline to hold possession and not spend it but if it was in a savings account and you had a sudden expense like major car repair or AC repair then you could access it. The govt isn't going to let you have that overpaid "refund" early even if your life is depending upon it.
The weird thing is, you sound financially savvy ... as in, you wouldn't just *** away the money each month.
But you instead CHOOSE to give the government an interest-free loan of $5,000?!
Seems contradictory.
Exactly.
I am financially savvy.
You show me how, with amortizing 416.67 a month over a one year period can return a worthwhile amount. Even a 1 year 5k minimum CD only returns 137.50. Except, since I am incrementally investing 417 a month, the best CD would be 0.6% APY for a 6 month CD. or much less for shorter periods.
The days of >10% CDs are long gone
Just not worth it!
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