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Make Your Late Payment Penalties Disappear

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Credit cards! I don’t know what you think but, to me, they’re an touchy subject. On one hand you get access to fast, easy cash. On the other you need to pay back those loans at what are eye watering rates of interest. Some of the worst offenders are store cards with interest rates of up to 34% APR. As with any kind of loan, easy credit comes with a risk. Are you on top of it or do you leave your repayments to the very last minute (possibly risking a late payment penalty)? Reboot your finances for 2012 and never miss a payment again.

Calendars

To some, this one might seem a little old fashioned but how many of you have calendars? How many of you use them just to show you when the Bank Holidays fall or to keep a track of birthdays? If you’re looking at it on a regular basis why not add payments dates here?

Mobile Phone Reminders

How many of you own a mobile phone? Looking through the sea of hands that just went up a better question would be, ‘How many of you don’t own a mobile?’. From cheap Android phones through to Apple’s iPhone; just about every handset ever built comes with some kind of calendar or reminder functionality. Simply add a reminder into your phone to pay your bill 3 – 4 days before it’s due.

Office Applications

email software is everywhere. Regardless of the operating system you run (Apple, Microsoft Windows, Linux, etc) they all come with an email client. If you’re using your email tool on a daily basis add your payment dates in on the calendar feature.

Text Alerts

Believe it or not, your credit company doesn’t want you miss your payment dates. Yes, they might get to bank an extra penalty fee but chasing debtors through the courts costs them time and money. That’s why most, if not all, credit card companies provide their customers with email and text alerts. Use them. They’re free and will save you some financial pain.

Money Management Websites

Have you heard of Mint? If not, there’s some information about them on this. Basically, they provide a free service that allows you to import your banking data. Tracking your incoming and outgoing is made simple and the software also allows you to create alerts for just about anything (including due dates for payments).

Write It Down

Like owning a calendar, this option might seem a little dated but it works. Put it on a post-it, write the date down in a notepad or a to do sheet (that you look at every day). Personally, I find that writing something down makes the information stick in my head better than typing it into a text-based computer document. Likewise, a regularly used diary is another great place to put your reminders (surrounded by a big red circle and starred!)

Whatever Method You Use….

…make sure you pay your debt! I have a preference for hand written notes/memos/reminders. You might prefer one of the other approaches. Combine them; have a diary entry and an email alert. It really doesn’t matter how you get those notifications as long as you pay your credit card bill.

Do you want more advice on how to save money? My name is James and I run Money Saving Zone so if you feel like joining me for more tips and advice on a more frugal lifestyle come on over and say hi.

 

Categories: Money Savings Tips - Tags: ,

How can you evaluate your retirement funds to eliminate your IRS debts?

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Taxpayers who owe money to the IRS should sincerely work on a plan to pay off the owed amount. The accruing interest and penalties on the outstanding balance will make it unaffordable to pay off. If you are unable to pay off your taxes on time then you are subjected to wage garnishment, seize tax refunds and the IRS department can make the taxpayers subjected to additional withhold. If you are financially crippled and unable to make payment on your other bills then hire the services of a debt settlement company. Pay off your other debts and then use your retirement fund to pay off your debts.

Qualified retirement plans give opportunity to the taxpayers to use the retirement savings plan to schedule paying taxes and this plan is regulated by the IRS. The taxpayer can use the qualified retirement plans like 401k plans and pension plans to pay off the IRS debts. These retirement fund comes under taxable income and if you withdraw the money before you attain the age of 60 then penalty will be imposed on the account for early withdrawals.

You can take out from other retirement funds like the money you save in the bank or in the brokerage account. There will be no tax penalty when you withdraw money from these accounts. Remember that a Roth IRA is also considered to be a non-qualified retirement plan. The taxpayers can take out money to pay off debts without being subjected to penalty.

How to use retirement plan fund to eliminate your IRS debt?

In qualified retirement funds like 401k plans and pension plans, the account holders have to leave the job before they withdraws fund from the account. There are some retirement plans that give permission for a hardship distribution. But when you default on your IRS payment then you will not get the benefit of hardship distribution. But the retirement fund can be used for various purposes once the employee leaves the employment. Remember that any type of distribution will be subjected to taxable income and distribution before the specific period of time will be subjected to 10% penalty. Therefore, if you use fund from your qualified retirement plan to pay off your IRS debts then you are required to pay extra taxes.

But you are not subjected to additional taxes if you use fund from non-qualified retirement plans to pay off your IRS debts. So this option is beneficial than using your qualified retirement funds to pay your IRS debt.

Know about IRS debt interest and penalties:

The taxpayers who are unable to pay off taxes for them the IRS provides a payment plan. An affordable interest is charged on the payment plan so that the taxpayers find it reasonable to pay off. The interest rate is calculated on a quarterly basis and it is similar to the federal short-term rate with additional 3% points. Recently the taxpayers are looking for a repayment plan option than using their retirement fund for paying off the IRS debts.

Categories: Financial Planning Advice

Can You Really Go From Zero To Rich?

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There is a lot of talk these days whether it’s really possible to go from zero to rich or whether it’s just a pipe dream.  But if you look at it objectively, everyone who is rich (unless they inherited it of course) pretty much started at zero and worked their way up.

So the truth is that, yes, it’s very possible to start with virtually no money and become wealthy – but it does take hard work.

The first step is to get your personal finances sorted out. If you have a good foundation set up for your money then you can use it to help build up your assets and your wealth over time.

You’ll find that most people who have a healthy budget, have taken steps to reduce any debt and have a good amount of savings are those that are likely to get rich over those that can’t balance a check book.

So how do you get your own finances in order?

The first step is to set up an emergency fund. You should have enough money in that fund to cover any unexpected expenses that you might have over the course of twelve months. Usually that’s around two thousand dollars for most people, although it varies according your lifestyle.

Once you have that set up you then need to start an easy to follow household budget that allocates money for your bills and expenses, spending money and of course savings. The simpler the budget the easier it will be to stick with which is why I like budget’s with just three sections: savings, expenses and spending.

The method I use is to pay into your savings (or paying down any unsecured debt if you have it) first before you do anything else.  Yes that means taking out that money BEFORE you pay any bills. A good amount is around 10% of your income but if you can manage more then it’s even better.

That way, once it’s taken out its done; you don’t have to think about it anymore. Then you can pay your bills and whatever is left over is yours to spend without feeling guilty.

By now you should have your emergency fund set up and are sticking to your budget, the next step is to pay any secured debt off that you might have.  Unsecured debt is things like credit cards, store cards, personal loans and so on. It doesn’t include your home loan which is secured debt (you could essentially pay the loan off by selling the asset).

Becoming debt free is a powerful feeling and once you’ve managed to pay it off you can start saving. And that saving is going to take you from zero to rich.

Tracey Edwards

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