Refund Anticipation Loans Are For Dummies

Have you ever paid the outrageous cost associated with getting a Refund Anticipation Loan?

Guess what? I have been that dummy! (Get ready! I’m feeling…ummm…in-your-face today.) ๐Ÿ˜€

I’ve been a dummy more times than I’d like to admit, and while we’re all being honest — so have you. I guess the question is this.

Are you going to do something dumb *this year* when filing your taxes?

If you have done the refund anticipation loans before and do not see a problem with them, let me ask you this? Do you realize that you are giving money away for nothing?

I know, I know. You only do it because you need the money NOW. That’s what they all say, but here’s the problem. You need your money now and you’re willing to give up hundreds of dollars — money that you undoubtedly need, hence your desire to get it faster — so you can “get caught up” and then blow the rest on something for yourself — because “you deserve it“.

Sure, some bills will get paid but let’s be honest with ourselves. If you are in a position where your tax return is going to make the difference between you making it or not making it, you have more serious financial problems to deal with. Since you only get one refund a year, what will you do the rest of the year? Which brings me to my next point.

If you’re struggling that bad what difference is a couple of weeks really going to make? Well…hundreds of dollars for starters! ๐Ÿ™‚

Think about how much that extra few hundred dollars will help you. If you’re saying with one breath you need money, but with the next saying you’re willing to give some of it up, that’s counter-productive.

Others will say “I don’t want to ruin my credit!”, and I said the same thing when I took part in that financial rat trap, but I digress. Question for you: This one moment is what’s going to do you in huh? I’ve been there before so I know that’s not true. One month is not going to ruin your credit.

What IS going to ruin your credit, however, is being so far behind on your bills in the first place, then borrowing for everything you buy, and tthhheeeenn…relying on your rapid refund anticipation loan to dig you out of your hole each and every year. Yep, that will do it for sure!

It’s what I call THE CYCLE! A bad one!

If you’re in debt your credit score should be the last of your concerns. First of all, if you don’t change your ways NOW, your credit will be shot anyway. And secondly, your credit rating should not be what guides you financially regardless of what society says. I’m not suggesting just because I have forsaken the “beloved” credit score by choosing never to borrow again, you should do the same. I would recommend it, but I do understand some of you are unwilling to be that extreme and others can’t because of employment issues.

So what is the point of this post anyway?

Well, the point is two-fold. You should never ever PAY for the opportunity to receive money that already BELONGS TO YOU, regardless of how fast you would get it back! Also, you need to think seriously about your financial direction and ask yourself if living the way you’re living is working for you financially.

Again, if you’re needing to spend hundreds of dollars to get your money now, that’s definitely a sign that your way’s not working. Try something else. See if it works. Just saying.

It worked for us. Now we’re debt free. We have opportunities we have never had before. We have options galore! Just last year I was able to quit my job and become a work-at-home-dad so that I could raise our kids and avoid expensive daycare costs. I gave up $30-35K a year,ย  for the terrific opportunity. One year later: I wouldn’t change a thing…especially the being able to spend more time with my kids part! ๐Ÿ˜€

We could never have done it if we weren’t debt free. Period.

So when you do your taxes this year, don’t think about how long you have to wait. Instead think about the opportunity cost and how much more you can do with your full refund. JUST SAY NO TO A REFUND ANTICIPATION LOAN!

Then you’ll be able to:

Save more money! Pay off more debt! Invest more for retirement! Smile a little bigger!

Don’t be a dummy by thinking that getting your refund any faster is going to be the game changer in your financial situation. The decisions you make and the habits you change are going to be your catalyst, nothing else.

We stopped paying for Refund Anticipation Loans about four years ago even though we weren’t ones to do it every year anyway. Even in my foggiest of financial days, I had a hard time giving up a few hundred dollars to get it quicker. One thing that helped us, however, was that we started filing earlier. No more waiting until April 15th and then waiting for our speedy government to send us a check months later! Do it NOW!

After H&R Block ripped us off with their “SPECIAL” IRA promotion years ago, we have used Turbo Tax ever since and absolutely love it!! It’s the easiest way to file your taxes I’ve ever used.

It’s tax time! Get all of your money back this year and make a difference in YOUR 2011! GOOD LUCK!

About Brad Chaffee

6 Responses to “Refund Anticipation Loans Are For Dummies”

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  1. David says:

    What a terrible combination! Paying too much in taxes, which basically lends your money the US government for free. Then paying a fee to get your refund back early. That is a formula for being broke.

  2. Kim says:

    You’re right about paying hundreds of dollars – I once worked at H&R Block, and the fee (privilege of use, hah!) is just insane. Typically the refund takes only 3 weeks since H&R Block does e-file. Paying hundreds of dollars for essentially a 3 week loan calculates to an INSANE interest rate! And don’t get me started about the card that H&R Block also sales to load your refund on – it also has ridiculous fees, akin to the Kardashian credit card. There’s fees to use it, fees to take out money, fees to put on money, monthly fees, fees to call customer service. H&R Block’s rationale is that they’re helping out the unbanked who couldn’t deposit an IRS check elsewhere, but they’re really just gouging people who don’t read the agreement.

  3. Liz says:

    One time I have been offered by this refund anticipation loan and since I don’t really know what it is I directly decline the offer. I don’t even know how RA Loans affect the loan taxes today though. Maybe I need to find reviews on how RA Loans works. –

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