Conventional Wisdom on Finances – Part I

The conventional wisdom on finances states that the average family/earner is best served by paying taxes claiming all possible deductions on your paycheck throughout the year, retaining as much of your own cash as possible and investing it, then actually compensating for unpaid taxes at the end of the year.  Dollar for dollar, the individual is further ahead with this approach.

 As an average middle-class spender and head-of-the-household, my responses to conventional wisdom are in the process of changing.  Our family has found that whatever our paycheck happens to be, we tend to spend just a bit more.  Due to a general lack of discipline, at the end of the year our credit card always seems to have a little bit more on it than I can pay off during that current month.  As a result, we have now changed our tax withholdings on our paychecks to reflect single status with no dependants.  Yes, this has given the government control of my cash for a year, but it has also actually reduced my spending (remember, we spend just a bit more than the paycheck, whatever that amount).  When tax time rolls around, we now have a refund significant enough that we’re able to pay off any consumer debt acquired during the year and we have enough left over to cover the cost of a vacation and some home improvements.  It’s working … and that’s better than going into debt …

~ by gilliganbrady on August 25, 2007.