How do people live like this?

[~bs]

Yesterday, one of my coworkers was all excited that our W-2s were available online. She explained that she had plugged everything into TurboTax the day before and the only thing she was missing was her W-2. Now she could file her taxes.

Why was she so excited?

She scheduled a ski trip for her and her son for President's Day weekend but she can only go on that trip if she gets her tax refund in time to pay for it. She's already told her son that if the refund doesn't come in time, they won't be taking the trip.

I suppose at least it's good that her plan isn't to charge the trip and pay it off later. She wants to have the money in hand, so that's something. But I can't imagine living that way. If I was so broke that the only way I could afford a vacation was to wait for my tax refund, I wouldn't be planning that trip. And I certainly wouldn't tell my son that we're going skiing until I was sure we were actually going.

Obviously, the fact that she needs her refund to pay for the trip means she has no savings. And clearly, she won't be using her refund to build any savings as she's spending it on a ski trip.

Rinse and repeat.

Worse are the people who take tax refund advances and pay hefty finance charges. Don't tell her about those.

[Jluke]

At least she is aware of how the system works and can use to her advantage [/sarcasm]

I had no idea someone could file before the end of January.

I barely get all of my documents by then and brokerages are allowed until mid-February to provide their tax statements.

[LivingAlmostLarge]

A lot of people love getting money back. It's enforced savings. Same way that like buying a home forces people to save instead of perpetually renting.

[myrdale]

A lot of people love getting money back. It's enforced savings. Same way that like buying a home forces people to save instead of perpetually renting.

I am not sure purchasing a home forces people to save.

For an interest only mortgage, you could pay for the house indefinitely so long as you're only making the interest payment.

I shudder every time I hear a commercial talk about "taking the equity out of your home" to pay off credit cards or make repairs.

Personally I am for people being able to get every dime they paid in taxes back. Where it gets more questionable for me is when they get back more than they put in.

[LivingAlmostLarge]

It does because usually people have a fixed rate of payment unless taxes go up drastically. I'm 10 years usually interest only turns into payments too and then you are paying down principal. I don't think there is interest only for 30 years. But even then if they were only renting by paying interest and no principal there is appreciation in home value you gain that you don't get as a renter.

So anyway you cut it, that's why home ownership leads typically to high net worth. And a big differential in racial groups for home ownership

[rob62521]

Sadly, so many depend on that for their spending money and so many businesses depend on it since it has become the new norm. Save money? Who me? I hear over and over from the folks I'm acquainted with that they don't make enough to save money, but boy, come tax return time, they look forward to getting that money and blowing it. One friend had a surprise. He didn't realize when he took a part time job after retirement that he needed to adjust his taxes. Wife was getting a break on health insurance because they hadn't made a lot on his pension and her part time job. He was making very good money and wound up having to pay back the government for the health care rebate. He had to get a loan. So, no refund/return for them, but a loan with a big interest rate instead.