Dave Ramsey says: Change withholdings, keep more money in pocket now

Dear Dave,

I just filed taxes, and it looks like I’ll get a pretty big refund this year.

A friend of mine told me I should adjust my withholding, so I don’t get a refund.

This seems pretty dumb to me. Why would I change my withholdings when I’m getting money back?

— James

Dear James,

The only reason you’re getting a refund is because you had too much taken out of your paychecks in 2017.

Let’s say your refund is $3,500. Basically, you loaned the government $3,500 of your own money, interest-free.

A refund isn’t a gift or reward, James. It’s your own cash that you get back because you paid in too much during the previous year.

In your case, that adds up to almost $300 a month!

Instead of loaning the government money that you worked hard to earn, wouldn’t it be a better idea to keep it in your own pocket?

— Dave

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