Quote:
Originally Posted by sweeps
I hear what you're saying, poundwise, but the fact is bad habits can be very hard to break. Sometimes people have to do things to trick themselves to break free from those habits and get into better ones.
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Yes, I understand this. Anyone who has become determined with a budget, serious about a diet, devoted to a self-adjustment (quit smoking, stop using bad language), etc. knows the pains of eliminating old habits and developing new ones. And, yes, sometimes little "tricks" or small adjustments are the best way to larger successes.
Unfortunately, the habit encouraged by the BOA deal I referred to is more spending. After all, the way to get more "change" is to use the debit card more. (Which, of course, is what BOA is looking for.) Using the debit card in this manner, and passively to boot, is a sure prelude to overspending; unrealized (initially) and justified (ultimately) - especially when you consider that this appeals primarily to people who (a) do not keep up with their debit card use to the penny anyway, (b) are admitting that they don't save on their own to start with.
Purposefully planning to let your employer deduct too much from your check each pay period so that you will have a larger tax refund is much the same. What exactly are you developing here? Its not long-term thinking. Its not financial accuracy. Its not a saving habit. In fact, it is a surrender. "I'm not going to save it myself, so I'll let Uncle Sam collect it for me and then I'll get it back from him later."
While things like these may make people feel good, they do not, in reality, stand-up as good planning when actual math is applied and real logic applied.
Math and logic say that it is best to pay the proper amount of taxes. That is, don't over-withhold. Why? Because, (a) you ought to be using your income against a planned and purposeful budget, including savings, or (b) even if you're not, you could at least change the withholding and put the realized difference into a savings account. At the end of the tax period you would have exactly the same amount of money as you would have received as a refund PLUS interest.
The only reason not to do so is, "That doesn't work for me. I prefer to get a lump sum from the government." Which is another way of saying, "I won't handle my own money well or rightly."
Of course, this is all IMO.
I just happen to be right.
