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Tax withholding?
shmokes:
I'm good at getting things out of sight. I've been contributing to 401ks and IRAs from a really young age. And I never even think about that money. I literally forget about it. But I also (up until recently when my exit from the workforce put us in abject poverty) always set up direct deposits so a portion of my paycheck would route into a savings account and it just never seems to build beyond like $1000. We'll get it up there, and then some expense will pop up like we'll need to replace the tires on our car or we talk ourselves into buying, you know, a grill or something, or I'll study abroad for a month. We'll knock it down and it'll build back up and then we knock it down, etc. The important thing about the IRS savings account, though, isn't so much that it puts it out of mind, it's that it puts it out of reach (I never would have studied abroad without it).
I used to be pretty bad. I just kick myself for having any debt at all. For years my wife and I were both working, making decent wages, had no kids, incredibly low rent, and no car payment. And we just spent like morons. AND we still managed to use credit cards in spite of having so much disposable income. Just inexcusable. There was a point when I could have been putting $1500 a month directly into savings if I didn't have a bunch of credit cards that needed to be paid off. I was, in fact, paying $1400 a month toward credit cards (about $1000/mo above minimum payments). We've certainly got our spending in check these days. I just kick myself for not having more discipline in the past. Things would be so much easier now.
But yeah, self-discipline is unquestionably superior to IRS-based forced discipline. But the latter, I think, is superior to no discipline or poor discipline. If one of the latter two apply to you, don't let the principle of the IRS thing deter you. The most important consideration is the reality of your own deficiencies. The IRS isn't the most efficient use of your money, but at least it's not the least efficient use. And, to be honest, I think that my conscious decision to have smaller paychecks in order to make use of the IRS savings account was in many ways a turning point for me. I was making short term sacrifices for long-term benefits for just about the first time in my life. I really think that saving through tax withholdings actually made me start treating finances in other areas more responsibly.
ChadTower:
--- Quote from: shmokes on October 16, 2007, 01:06:49 pm ---I was making short term sacrifices for long-term benefits for just about the first time in my life.
--- End quote ---
That's where the way I grew up comes in... that behviour is first nature when you've been doing that from your earliest memories and there is absolutely zero margin for error.
EDIT: well, I should add, that becomes first nature if you ever intend to improve your situation. Many people at the bottom of the financial barrel never learn that.
shmokes:
Well . . . I don't know your precise level of poverty, but I was pretty damned poor. My Dad made about $40,000 a year by the time I moved out of the house in 1996, which isn't too bad, but my mom never worked and, since they had 15 kids, there was almost always 9 or 10 living at home at any given time, and never in my life did my parents accept a penny of welfare or food stamps or even WIC. I had a job pretty much since I was 10 (paper routes and the like), but I never treated the money responsibly, aside from sometimes having to buy my own clothes. I wish that my poverty made me financially responsible, but I think it had the opposite effect. When I found myself able to have things for the first time in my life, I was having them and that was all there was to it. :)
Samstag:
I prefer to be the short-term savings account for Uncle Sam. I withold close the minimum I can get away with without being penalized. With a %5 savings account I can easily make $100-150 extra on Uncle Sam each year.
[rimshot]Before taxes, that is...[/rimshot]
ChadTower:
--- Quote from: shmokes on October 16, 2007, 01:17:39 pm ---Well . . . I don't know your precise level of poverty, but I was pretty damned poor. My Dad made about $40,000 a year by the time I moved out of the house in 1996, which isn't too bad, but my mom never worked and, since they had 15 kids, there was almost always 9 or 10 living at home at any given time, and never in my life did my parents accept a penny of welfare or food stamps or even WIC. I had a job pretty much since I was 10 (paper routes and the like), but I never treated the money responsibly, aside from sometimes having to buy my own clothes. I wish that my poverty made me financially responsible, but I think it had the opposite effect. When I found myself able to have things for the first time in my life, I was having them and that was all there was to it. :)
--- End quote ---
Below that. Well below. Senselessly below, now that I'm adult looking back.
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