Refund Psychology

If you are one of the (un)fortunate employees that are entitled to a federal tax refund, then it probably means you are right at the cusp of "uber-wealthy" and there is always next year for your Swiss bank account. However, for those of us that hastily prepare and file our 1040s in anticipation of getting a sizable check, we should take a moment to consider what is going on here.

Let's make this as simple as possible. Here goes. You sell your soul to the devil in the name of a paycheck. By the time you see the direct deposit in your magically shrinking checking account everyone and their mother has stuck their hands into your loot to claim a portion of your pretax salary. That means Uncle Sam on EVERY level inserts his, err...takes his portion, your insurance company, your public transit provider, etc. By the time it is electronically deposited into Chase you notice that those entitled to your money before you were kind enough to leave you with enough to cover your rent, afford the utilities bill that's three months overdue and a few paltry happy hours to cope with the aforementioned deal with the devil.

Then when you've finally arrived at that place that every abused Catholic boy has faced, when he listens to his chapped ass and realizes he physically can't take anymore, you check the mail anticipating bills that you can't afford. You insert the key three quarters of the way into the box, because by now you've realized that the key doesn't fit perfectly and it requires finagling to turn the locking mechanism. Exhausted, you flip through the countless credit card offers, Time Warner cable bundled discounts, and fumble upon an envelop from the federal government. You open the check that you had spent months ago and realize that life is just barely bearable because you finally got something back (after giving so much).

WRONG! You got your own money back. That was the money that you overpaid to the federal government, or excuse me, the money that was withheld in excess of your tax liability. At that moment, I [S.A.] realize that I and every other recipient of a refund have acted like a gigantic bank for the federal government. It's all very complex and involves the time value of money, but the bottom line is that the government was holding your money and chose to return a portion of it at a time that was convenient for them. Next time you're on your refund shopping spree, remember that it's nothing extra or special, but rather money that rightfully belongs to you. Forget it. What am I talking about? Steve Jobs would love to have you spend your refund check on another gadget.

Financial Crisis

Let's play a simple game.

What if I told you that there is a metaphysical place that exists in the universe and that place houses a fascinating machine? Furthermore, this machine has the potential to get you rich 99 out of 100 times. The only thing you needed to do was place a dollar into the machine and it would return $1.15. You would surely keep putting your money in that machine, wouldn't you? Well, what happens if you go to put your dollar in the machine one day and it doesn't return anything (not even your original dollar). What happens when this crazy little machine stops working?

Game Over (2009).

Tennis Shoes

By now we're all familiar with the cliche, that once we've struck it rich there will be something that we immediately buy, for whatever reason. Sometimes athletes will look to take care of their mother and buy them a mansion or maybe an actor will reward a family member with a Mercedes Benz. It's all so cliche, but I have one particularly special item that I will purchase upon "making" it. When I make my fortunes in the world I will skip the Bentley, skip the beach house in the Hamptons, skip hiring a personal chef and head directly to the nearest FootLocker. There I will buy the sneakers that I have wanted since 1997 - The Nike Air Max '97s. When they initially came out I was an eighth grader in middle school and tried to convince my parents that $160 was a small price to pay for my happiness, but they all of a sudden became selectively hard of hearing. Then in May of 2007, I was traveling throughout Europe and saw all of these filthy Italian kids with their D&G jeans and my favorite shoes. I walked into a shoe store and they were 160 Euros (x the $1.50 exchange rate), and I passed on them. Now I walk by shoe stores on a daily basis and see them calling for me, whispering in my ear, and begging me to stink them up, but I can't do it because I've committed my money elsewhere (namely rent and Ryan's). So when I finally make it to the PBA, the first thing I'm going to buy with all of that sweet moolah is a pair of Air Max '97s, because that's what I've always wanted.

Reader Contribution

One of the subscribers to this blog, we'll call her Nicholas (in favor of keeping her anonymous), is the inspiration for this post. So Nicholas and I talk regularly, and during one of our first conversations I confessed that I enjoy reading, especially books that everyone else praises. Nicholas assumed I must spend a lot of money on books. "No, I just borrow books that people claim I have to read," was my response (read: frugal miser). Nicholas, the eternal student spending the majority of her life in school and recently graduated with a Masters, confessed that she loved reading as well, and the following dialog transpired (to the best of my recollection):

Nicholas: Do you do the Barnes & Noble policy?
S.A.: Yeah, in the past I've bought books there, but I prefer Borders. They send me more junk mail and coupons.
Nicholas: No. Barnes & Noble has a 7 day return policy [often overlooked]. So you buy a book and have 7 days to return the book to put the credit toward another book. No questions asked. So you buy a book once, and you essentially have access to every title.
S.A.: This works? They never give you they eye?
Nicholas: Works every time. Maybe it's because I'm a girl.

At that moment I knew what it felt like to find the Rosetta Stone. It's like I had been living years in the darkness, and then Nicholas showed me the light. I immediately had a soul mate, a girl who was literate, aware of details posted on the back of the receipts, and a student for her entire life.

Don't kid yourselves, we are living through a Depression. Nicholas and I just saved the three of you (readers) mucho dinero and provided you with hours of entertainment, so now you can have a break from your pedantic lives and enhance it with some culture. You're welcome!