Generally speaking, if you are a person who lives on a pretty tight budget, tax time isn't that big of a deal to you. You probably don't earn enough to hit that huge tax increase that comes with a 150K/year income, and you generally see a check from the IRS as opposed to scrambling to pay a tax bill. Oddly enough, most folks I know seem to need that little refund at this time of year; busted dishwasher, camp deposit for the kids, knock off some of the Visa bill you racked up at the holidays... that sort of thing.
Most financial experts will tell you that using the IRS as a little savings account is a pretty dumb idea. You get absolutely no interest on the money you park with them over the course of the year, and could actually realize some financial goals a bit sooner if you keep the cash with you. Here's my problem with that: the minor interest you'd realize on your return over the year doesn't generally add up to much- especially in this economy. In this day and age, banks "generously" dole out a percent or so for the garden variety savings account. BIG DEAL. Sacrificing this little "windfall" to safeguard money that I cannot access until tax time each year means that I can count on that cash when I always seem to need some extra. Stores have noticed this- just check out the deals to be had at tax time for items like appliances, cars, vacations and so on. My local park district even runs a special for thirty percent off a family pool pass for the upcoming summer season. Early bird specials for kid's camps abound; pay now, and they knock money off the bill. Your savings alone will outpace interest realized over the year every time.
I do have some pals who will argue the hell out of this- and they'd probably be right... to a point. These are people who track, file, colate, and analyze every cent they spend. Their financial virtue is without question and money management is a game they play very well. The rest of us are possibly, oh I don't know... less gifted in that department. Time and organization are at the top of our resolutions every January 1st. For those of us that mean to be fiscal tigers but somehow just wind up being meat, I think tax rebates offer us a little forgiveness, a bit of financial grace. Here is the ready cash to cover the unforseen, the failure to plan, the sneaky bit of bad luck.
Having blathered on about all of that, I do think now is an opportune time to deliver a small but necessary lecture, entitled STOP BEING YOUR OWN WORST ENEMY. Yearly financial desperation of your own making is stupid. If money management is not your best skill, understand that you will hemmorage cash out the wazoo until you learn to budget. Not knowing where your money goes is the fastest way to lose it. It takes energy, committment, and time to circle your fiscal wagons and get control of your cash. You may have resources you did not realize, once you've learned to eliminate the chaff and stop overpaying (or worse paying twice) for things like cable, food, phone and internet services, clothing- the list goes on and on. Tips and tricks, coupons, freebies, blah blah blah are all out there. Go get 'em, Tiger.
