Evan Vitale

Evan Vitale – Getting Out Of Debt (Part V)

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By Evan Vitale

In this blog post, we’ll wrap up our series on debt and, more importantly, how to get out of debt. While it’s true we always carry around some form of debt, it’s certain not enjoyable to have a lot of credit card or tax burden debt hanging around your neck.

It’s true that we are living in a time where debt seems like it’s encouraged. We’re bombarded with credit card offers in the mail and by the cashier at the department store. We’re told how easy it is to buy tickets and rent a beachside condo for a vacation in Jamaica and how we can earn points for spending, spending, spending so we can upgrade flights at any time, etc.

In addition, loan brokers tell us that we can borrow up to 125% against our home equity and, if we need quick cash, you can get a loan on your car title.

At times, it definitely sounds like a mound of debt is the way to go, but it’s not pleasant when it’s time to pay the piper.

When money is tight, many people take the easy route and pay for things with a credit card. Try to avoid that temptation, especially if it’s not for essentials such as food, medical, gasoline, etc.

Instead of going into more debt, see if there are opportunities for more work or overtime at your place of employment, seek out a part-time evening or weekend job or tighten your belt and spend less money.

Debt isn’t always a bad thing. You’ll need to carry some level of debt when buying a house or a car or going to college. Someone once said to foster the debts that help the cause and banish the ones that don’t.

Always be looking for ways to control your spending and debt. Cut back on unnecessary purchases and expenses. Save. Save. Save.

Evan Vitale – Getting Out of Debt (Part IV)

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By Evan Vitale

As we know, credit cards can get you into a lot of debt very quickly. Credit cards are easy to obtain but if you don’t control and manage your spending, you can get into a lot of trouble very quickly.

So, what happens when you get in over your head and you can’t keep up with paying off credit card debt? After all, paying the minimum payment each month is not nearly enough to provide relief.

Here’s when most people consider hiring a debt consolidation agency to help and guide them through the debt consolidation process. Here’s how it works:

A debt consolidation agency will help you develop a plan that will help you pay off your debt. In addition, some agencies will continue to provide additional services after the debt is resolved in order to restore and rebuild your credit score. Debt consolidation agencies pool your entire debt together so that you’ll make one payment per month until your debt is paid off. In some cases, they will work with the credit card companies and may be able to get some of your debt excused.

A word of warning: debt consolidation agencies charge fees so make sure the amount you pay them won’t be more than the interest you’re paying to credit card companies.

Do a little bit of research before you hire a debt consolidation company. Read their websites; check out their reviews and call them to schedule an appointment. It’s always nice to have someone on your side you can help guide you through your debt process and make like a little bit easier on you.

Evan Vitale – Getting Out of Debt (Part III)

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By Evan Vitale

Our series on getting out of debt continues today by taking a look at credit card debt.

As we know, it’s very easy to use plastic; buy things we don’t really need and run up a credit card bill. While it feels good to “shop until you drop,” it certainly doesn’t feel good when the statement comes in each month.

Paying the minimum amount is only a temporary fix. Over time, the interest on your debt will bury you and, perhaps, you won’t be able to use your card again. Therefore, here are some steps on how to get your credit card spending under control:

  • The biggest step in getting your credit card debt under control is to stop using your credit card. Stop. Stop. Stop. A good rule to follow while you pay down your debt is to only use cash (or a debit card). In order words, if you can’t pay cash, then don’t buy it.
  • If your debt is serious – and a spending problem exists – cut your credit card(s) in half. This will definitely keep you from using them.
  • Create a spreadsheet and record your credit card accounts; how much you owe and how much you pay on each one each month.
  • Compare your numbers with your other living expenses: mortgage or rent; food; utilities, etc. You’ll be able to make quicker progress on reducing your credit card debt if you create a strict budget. That way, you’ll have a better handle on income and expenses and how much money is available to pay down your credit card debt quicker.
  • If your numbers don’t match up and you can’t pay more than the monthly minimum payment on each credit card, then you’ll eventually be in the red each month. The interest on those cards will continue to mount.

Next week, we’ll take a look at some options and theories on reducing and paying off credit card debt.

Evan Vitale – Getting Out Of Debt (Part II)

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By Evan Vitale

Let’s continue our series on how to get out of debt by focusing on a major stress point for many people and that is tax debt.

Depending on your situation, you might be past due on paying your federal taxes to the Internal Revenue Service (IRS); state taxes or county and local taxes. In all cases, ignoring tax reminders and past due notices, won’t make the matter go away. The longer you wait to solve the problem, the worse it will be, especially with mounting interest and penalties.

The best thing to do is to pay off – as soon as possible – any past due taxes you owe. Of course, that is easier said than done, especially if you are in a financial crunch. If that’s the case, you should contact the IRS (and any other agency you owe); explain your financial situation and offer to make payments. In most cases, all agencies will be willing to accept a payment plan. However, you should be aware that part of the payment terms is that you must remain current on payments and file and pay all future tax liabilities on time. If you are self-employed, you should be making quarterly payments on time.

In the case of federal taxes, the IRS has information on payment plans and installment agreements. You can read about them here:

https://www.irs.gov/individuals/payment-plans-installment-agreements

According to the IRS, “if you’re financially unable to pay your tax debt immediately, you can make monthly payments through an installment agreement. As long as you pay your tax debt in full, you can reduce or eliminate your payment of penalties or interest, and avoid the fee associated with setting up the agreement.”

Remember, always file your tax returns on time – even if you can’t pay the balance due in full. All tax returns must be filed in order to apply for any payment agreement.

In our next blog, we’ll review how to pay off credit card debt.

Evan Vitale – Getting Out Of Debt (Part I)

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By Evan Vitale

We all have some level of debt – a mortgage, a car payment, etc., but big-time debt could include past-due tax liabilities and a mound of credit card debt.

However, even if you feel like you are “drowning,” there are plenty of options and steps you can take to manage it better and get out of debt before you even consider bankruptcy.

First, let’s discuss past due tax debt. If you owe the Internal Revenue Service (or any state or local authority), this is something you should take care of right away. The IRS is more than willing to work with you on allowing for monthly payment arrangements (more on that in a future blog post).

The worst thing you can do (or not do) when it comes to ignoring your tax debt is to ignore it. Believe me, it’s not going away. Ignoring “past due” statements only increases your debt with additional interest and fees, but the correspondence will become more severe until you eventually face possible garnishment.

Do not ignore your tax debt.

When it comes to credit cards, the best thing you can do in order to handle this amount of debt is to stop using your credit cards. Just stop.

If you have multiple card cards, read your statements and figure out which card is charging you the most amount of interest and then focus on paying off the balance.

Another theory to handling credit card debt is to pay off the smallest debt first and move on to the next lowest card, etc. Some choose to pay each card each month and this is good, but you’ll need to may an effort in making sure your payment is larger than just the minimum due.

If you only pay the minimum amount due, it will take you a long time to pay off that credit card because of the interest charged.

Again, take a look at the interest each credit card is charging you and make proper payments accordingly.

In our next blog post, we’ll take a more in-depth look at how you can pay off your tax debt.

Four Things to Know About Old Debt

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Sometimes an old bill will come out from hiding and haunt you. Maybe you totally forgot about it after mail getting lost or simply lost track of the bill? Whatever it is, your old debt will come back and haunt you as creditors start calling and bugging you to collect on what you owe. Although you’ll want to make sure to pay off old debt, there are certain things you should know about it:

Collections have time limits

Each state has its only limits on how long creditors can try and collect on old debt. Some are for five years, while others are 15, depending on the type of debt you owe. Once that time ends, the creditor doesn’t have any legal recourse to make you pay, which means you can’t be sued, have your bank account seized or be subject to any wage garnishment. But that doesn’t mean that you don’t have to pay it. The only way to make it not reflect on your credit score is to get rid of it by filing for bankruptcy.

Old debt and your credit score

The longer you don’t pay a bill, the more it will impact your credit score negatively. And if you go 90 days or more without a single payment, the creditor can charge off your account, which will have a bigger hit to your credit score. Negative marks on your credit score will show up for seven years and can impact whether you get approved for a house or any new loans. Paying off old debt won’t necessarily get your credit score in positive territory and still takes time to clear before it gets any better.

Not paying old debt

If you decide not to pay an old debt in full, know that you will get harassed by creditors and they will call day and night to get their money. There are even some collectors that will bother you 10 to 20 years after because they specialize in buying old debts for cheap and then hound customers until they eventually pay. And if you acknowledge that you actually owe the money over the phone, the clock restarts and now those collectors have even more time to buy you. When you are dealing with collectors, say as little as you can, especially if that collection window is almost closed. Instead, ask for written validation of such debt and then keep a traditional paper trail of your communications so that you protect your rights.

How paying off debt can work to your advantage

Paying off old debt can sometimes work in your favor, especially if you are planning on refinancing your home, buy a new car or get a mortgage loan. Even though your credit score won’t be great, the lender will at least see that you are trying to get your finances in order and are serious about it.