Rich people's advice

Email Print posted by MedfordTim 04/14/2008 03:36:24 PM EST

Google Technorati del.icio.us digg reddit
My!

I love it when I hear rich people discussing "everyday economics." Yeah, make sure I don't ever get a refund from the government on my taxes. Really good advice - if you are sitting on a $10M checking account and can easily write a check to cover any shortages.

What about the person who scrapes by all year long and even a "tax owed" charge of $100 is a burden? Don't people like Suze understand that overpaying on deductions is "insurance" against owing at the end of the year?

If you're one if the luckier ones who have a whole lotta income from your job, maybe it makes sense to hold back on exemptions in the workplace, bit how much do you actually accrue in interest if you don't claim the exemptions in your paycheck? Let's say it's $100 per month; $1200 for the year, interest rate of 3.5%. Interest accrued would be $23.

One has to decide if all the trouble is worth the effort. Remember, you will have to pay taxes on that interest in the following year!

Now, I don't even have to file anymore because I don't have any earned income, but if I still did, I would still make sure that I had that cushion, if for no other reason than my STATE taxes were RARELY covered by the amount withheld and I needed the Fed check to cover the state.

What's your situation? Do you have enough in the bank to cover any shortages in the amount owed come April 15th? Does Suze's advice mean anything in your situation or does it seem more suited to those already in a six-plus-figure income?

< AWK...WARD | Maybe CA Is Not The Best Place To Live After All... >
 Display:
Rich people's advice | 3 comments (3 topical, 0 hidden)
Credit cards (none / 0)
I agree that that's not really going to make a big difference. However, to be fair, she spent a lot more time talking about things that do matter, like credit cards. HUGE interests, and many people borrow LOTS of money. Anyone doing this needs to sit down and count on it properly.

by Erik on 04/14/2008 07:17:12 PM EST

I agree on taxes (none / 0)
If you have the savings to pay large tax bills it makes sense to try to minimize your deductions.  But most of us are not in that situation.  Havin g a thousand dollar tax bill can cripple you for months.  The tax laws change several times a year and put you in debt quickly.  The ATM was just barely changed this year or many would have had to pay them.  Causing many to carry them on their Credit Cards.  That tax refund is a saving device for many.   
I have found much of her advice sound, but that advice needs to be adapted to the situation of each person.  She makes good points on 401Ks and Home Equity, but taxes should be taylored to the person paying the tax. 

by jdenham on 04/15/2008 11:27:12 AM EST

me (none / 0)
I prefer getting a check from the government that I can then use to pay off credit card debt.  Much better to pay the $25 to force me to not spend that money.

by desertpear on 04/15/2008 01:43:34 PM EST

Rich people's advice | 3 comments (3 topical, 0 hidden)
 Display: