Live in California (OR KANSAS)? Pay your taxes ASAP or your refund might be an IOU.

Ahhhh California, the land of milk and honey! It's the only state governed by a Terminator, and according to wikipedia, California's GDP is greater than all but 8 countries in the world. So, why am I comparing California to a modern day Wimpy (remember that lovable character from Popeye who was always willing to "pay Tuesday for a hamburger today")? Well, according to breaking news reports, Arnold might not have enough money in his coffers to cover the tax refunds for all of his constituents. If you are from California, don't fret too much. You would still get a refund in the mail, but rather than including a check, there would be a Wimpy-esque IOU.

If you think this is a far-fetched conspiracy theory, think again. Back in 1992 California actually issued IOUs to 100,000 state employees in lieu of their paychecks - FOR 2 MONTHS. While a delayed refund would certainly be an inconvenience, it really shouldn't be that big of a deal. Or, maybe it should be. Apparently, there are many people out there who don't trust themselves to save for anticipated expenses. They use their tax refund as a savings account, adjusting their withholdings so the resulting refund will cover their property tax bill which is due in April. Unfortunately, an IOU can't pay off a property tax bill.

I've always been confused by those who would rather overpay the government and let it hold onto their money until the end of the year. Sure, it is exciting to get a big check from the government, but I find the time value of money to be much more thrilling (that sounds a bit geeky). Anyhow, a buddy of mine reminded me that not all people have willpower when it comes to saving - a dollar in the bank account is a dollar that will get spent. Frankly, I don't buy that excuse at all. In a future posting, I will suggest a solution. It involves direct deposit, online bank accounts and some of the best interest rates around.

UPDATE (2/17/09): Wake up Toto, looks like you'll be receiving an IOU in the mail this year as well. There's no place like home...No place like home...