If I have that money now (instead of April), I’ll have that to better invest now.
Because of our earlier frugality (great credit, and high credit amounts available to use), we can use someone else’s money to purchase investment properties and fix them up. Then resell them for a profit. The current one we’ve put an offer on can yield us between $5,000 & $20,000, depending upon what a buyer will pay for it. Keep in mind we aren’t using any of our own money, just borrowing on 0% cards and such to use someone else’s money for a small price of $75 or so (to borrow $30,000 in one case).
Let’s see, spend none of our own money (yes, I include the balance transfer fees in my calculations), and get between $5,000 – $20,000 in a 6 month timeframe. Admittedly these situations don’t occur often.

Perhaps the interest earned on a regular bank savings account is not worth the risk of over estimating withholding allowances. And it maybe it’s not a big deal to loan Uncle Sam the money free of charge for a year or so.

However….

Given the abysmal deflation of the dollar recently, even if I get back all my excess witholding in refunds, I loose purchasing power both to inflation and currency deflation. Ironically, It’s Uncle Sam who makes those same dollars worth less at the end of the year with his free-spending government fiscal policies. What’s the present value of those dollars received a year from now, factoring in both inflation *and* currency devaluation caused by Fed policies designed to benefit and protect Uncle Sam and his spiraling debt?

The sooner I can get those dollars and invest them in hard assets with a chance of appreciation, the better. Heck, if my assets just hold value I’m ahead of the game. If Uncle Sam holds my dollars, he gives me back dollars that are worth less than when he took them.

So, my real gain is my not only return I earn on my investments, but also preservation of spending power. If I can invest these dollars for long-term capital gains, I pay less tax than cited in the example. Futhermore, if I utilize some of the fantastic personal retirement investment vechicles (Roth IRA’s, solo K’s, etc), then I can potentially invest these dollars at *zero* taxable gains!

Consequently, If I get all my excess withholding dollars back via a tax refund, I suffer loss. I hate loosing money! Even if it’s a few hundred dollars gained by getting those dollars now rather than later, It’s worth it to me. Maybe it’s just the principle of the whole thing.

Just the other side chiming in….

Jimbo

While it is true isn’t that much money, I’d counter that by saying that to me it’s the principle more than the amount. In other words, I don’t like the fact that they have the money and I don’t, whether it’s $25 or $25,000.

As far as your other points go, I feel that successful personal finance boils down to information, behavior, and discipline more than anything else. I won’t “mess it up” so long as I’m informed, it will not help me to “live leaner” because I am already disciplined, and they don’t need to “save it for me” because my behavior dictates that I’m a saver to begin with.

Keep it up! It’s always great to hear the other side of anything!!!

How about this for a topic – “Don’t invest in your 401(k) plan”

1) The match is overrated – many people don’t stay at their jobs long enough to vest.
2) The money is tied up, and unavailable for important stuff like paying down unforeseen consumer debt, etc.
3) Most 401(k) plans’ fund choices are not optimal
4) (worst of all) You’re converting gains that would be long-term capital gains into ordinary income. And, when you die, there is no step-up in basis; your kids will pay ordinary income rates instead of inheriting the stocks at their fair market value on the date of death (as would be the case in a taxable account).

Anyway, you have a great blog and great post.