View Full Version : What's Money For?

02-04-2012, 01:16 PM
As promised this thread is in reference to bigredhunter's thread yesterday about getting a lot of money back from the IRS and his intent to buy a new bow. This will probably get a little long and boring for those who are not interested in financial matters. It's something I learned about 25 years ago when I was stupid and didn't save any money. So here goes:

BRH is supposedly getting about 6K back fom the IRS. My question is why????? Why are you letting Uncle Sam have $250 of each paycheck (assuming a two week paycheck) when you can change your W4 to break even and invest that money yourself? Stocks, bonds, mutual funds, or even lowly money market funds. Even short term CD's if you don't know anything about investing. Anything is better than nothing. And if you just have it in a savings acct. at least you have access to it in the event of an emergency.

I was taught this back in 1983 at the ripe old age of 37. My only regret is that I didn't have this knowledge 10 years earlier. Well, I changed my W4 after calculating how many exemptions needed to about break even on taxes. I opened a credit union acct. and started saving that money. As I paid off debt and got raises I just increased the amount going into the acct. and in a couple years had enough to open mutual fund acct's. Having some money saved was such a blessing mentally (that rainy day thing), but what's more is that I learned how to manage money instead of just spending it.

Many people don't save anything and some don't save as much as they could. Some use the excuse that "you only live once" and say they could die any day so why not have fun. The facts are that the vast majority of people live a long life and come to find out too late that they should have saved more for a retirement nestegg or other things, like traveling or the grandkids---whatever you like.

Here's one for you. Take half of that 6K and pay down the mortgage on the house, or credit card debt. Depending on the size of your mortgage and/or interest rate that 3k a year could end up saving you tens of thousands in dollars just in interest while knocking ten years or so off a 30 year mortgage. How about that credit card; 15% or 20% interest rate? Keep that 6k every month and pay down that card. It's the same as making 15% to 20% a year on investments which is very hard to do these days.

These are just a couple examples on how to manage money and put yourself on easy street in time. Letting Uncle Sam have it without paying you for it is not one of them. There are lots of other ways to improve your living. Have life insurance??? What kind? You could be wasting a lof of money there, too, but that's another thread if anybody is interested.

And bigredhunter. this is not meant to criticize you personally. I'm just using your numbers for examples. And Gravedigger, hope you learned something that you didn't know. You asked and I answered, hopefully without insulting you or anybody else.


02-04-2012, 01:40 PM
Good post! I'm in the same boat with a beastly tax return, but a lot of mine comes from my kids right now. Because of the way things are structured now, we get a large credit at the end of the year which really kicks are return up. We have planned on that every year that we have had kids and each year we make a house improvement. Last year we did a new floor for the kitchen, year before new carpet. Then we pay off any debts we have. It's been nice and we haven't really ever treated it as a "fun" fund.

Although, I do need to continue to look into ways to get more out of my check and into my savings. I delayed putting into a 401k for too long, but I'm fully vested at my company so that all comes with me when I leave and I'll be putting into a new account with my new job until I merge them together. Being able to put money into investments throughout the year is the ideal goal.

For me, as I've mentioned in the other post, I have a payout check coming that we are going to use to treat ourselves to a few things and then the rest will be going towards the house/debt/savings.

02-04-2012, 04:53 PM
i have not put much thought in to tax investment.i did learn a few things.we want to open a IRA and get that going so if i did figure out what to change on my W4 then i should be good to go ahead and start one up.im 28 and look forward to not working some day and want to enjoy the time.

thanks barry