Tax Debt Relief – Negotiating with the IRS

Tax debt relief is rare, but is sometimes awarded to individuals who’ve overextended themselves and are unable to pay their taxes by the time they are due.

Unfortunately, getting Uncle Sam to cut you a break is not easy. That’s because all the laws are written to favor the federal government.

Sure, the government provides bankruptcy laws. But going through bankruptcy does NOT discharge your tax obligations!

In other words, the government will forgive your debts to others, but will not forgive the tax debts you owe to them.

If you think this is a hypocritical double-standard, you’d be right. Nevertheless, it’s just the way it is, and we have to play by the rules our legislators make.

Tax Installment Plan

The most common kind of relief the government will offer you is some kind of installment plan. They may allow you to make four or five equal payments over four or five months. Or they may spread out your payments over 60 months.

Every situation is unique. Different terms are offered to different people.

If you have a huge tax obligation, an installment plan will at least break down the payments so they are somewhat more manageable (although certainly no less painful).

Offer in Compromise

Although it is extremely rare, the IRS may offer you what’s called an Offer in Compromise. This is basically the same thing as settling a debt.

If you owed $20,000, the IRS may evaluate your situation and decide you will never be able to repay that tax debt. And so they may allow you to make a single lump sum payment for less than what you owe.

By making this reduced lump sum payment, the IRS then agrees to wipe out the entire tax debt.

In a perfect world, an Offer in Compromise would be more common. But the federal government is quite greedy, so this kind of settlement is very rare.

How to Seek Tax Debt Relief

Anytime you face a tax obligation that you cannot pay, then your best course of action is to contact the IRS and talk to somebody. Do not try to hide from the IRS; be transparent with them.

Many times you will be able to negotiate some kind of installment plan. In fact, there are four different kinds of installment plans depending on how much you owe and your past history of filing your taxes.

You can find out what you qualify for by searching the IRS web site or calling an IRS agent directly.

If you are facing a genuine hardship involving a disabled child or insurmountable medical bills, the IRS may be willing to forgive a portion of your debt through an Offer in Compromise.

But in order to see if you qualify for such an offer, the IRS would need to thoroughly evaluate your financial situation.

Remember: Tax debt relief comes in many forms. Don’t procrastinate and try to hide from the IRS. Call them and work something out. You will feel less stress and you’ll be happier when you resolve your tax debt as quickly as possible.

Earning Extra Money – 5 Fool-Proof Methods Revealed

Everybody wants to be earning extra money since the recession hit. Many people around the country are struggling to pay their bills, and they want to know what they can do to make up the difference.

Well, I’ve by no means cornered the market on ideas for earning extra money. But I have been working from home for nearly 5 years now, so I’ve got some experience.

Plus, many of my clients are doing well financially — and I’ve gotten to peek inside their businesses. So I know which methods work and which ones don’t.

With that in mind, I offer the following 5 fool-proof methods for earning extra money:

Method #1: Mystery Shopping

One popular way to make extra money is to become a mystery shopper — somebody who gets paid to shop certain stores and report on their experiences.

Companies will often pay for mystery shoppers to shop their own stores because they want to know that the shopping experience is a good one. In a way, it is a form of covert quality assurance.

While I’ve not done this personally, I do know a woman who has quite a bit of experience in the field. Her name is Cathy Stucker. You might want to look her up if you’re interested in mystery shopping. She has a how-to guide available.

Method #2: Sell Products on Ebay

Do you know how to find and buy a certain line of products at or below wholesale prices? Or do you think you could?

Then you may have what it takes to sell products on Ebay.

I have a good friend who has made significant profits (to the tune of $15,000 in a year) by reselling used books on Ebay.

The trick here is to have a consistent supply of products you can buy at a low price. Your profit is based on the difference between your cost and your sale price.

Not all products sell well on Ebay. And it’s not always easy to find a good product supplier. But if you think creatively and do some research, this may be a good option for you.

Method #3: Get Paid to Write Sales Copy

I’m a freelance copywriter. I write direct response sales copy for a living: ads, sales letters, emails, etc.

If you have writing ability, and you like the idea of persuading people to buy products through the written word, then this may be a good avenue for you to explore.

I personally worked as a copywriter for 3 years before going freelance. And I also took the AWAI Six-Figure Copywriting course before striking out on my own.

No doubt, your path will be different than mine. You can research the course I named above. You can also check out classic copywriting books like Scientific Advertising by Claude Hopkins and The Ultimate Sales Letter by Dan Kennedy.

Or you can check out two online products I have: Copywriting Code (to learn how to write sales copy) and Get Clients Report (to learn how to get copywriting clients).

Method #4: Write an Ad-Funded Blog

If you like to write and think you could write articles about a particular hobby you have, then you might consider starting a blog.

How will you make money?

Simple. Through ads that you place on your blog. You can make money through Adsense blogging, affiliate links, text links, etc. There are actually quite a few ways to monetize your blog writing.

As with any worthwhile endeavor, blogging does take work. And you have to be consistent to attract and retain readers. So keep that in mind before you start a blog.

Method #5: Create & Sell Your Own Digital Product

A fifth and final way for earning extra money is to create your own digital product and sell it. You can write an ebook, record an interview, or make a video.

Then you can sell that product through Clickbank. Or sell it on your own and collect money through PayPal. Or get your own merchant account and shopping cart and collect the money that way instead.

The beauty of a digital product is that it can sell consistently for years. And with the right product and the right traffic to your offer, you can easily make $50 to $250 extra per month. This is conservative.

Earning Extra Money Doesn’t Have to Be Hard

When you use your creativity and start researching your options, you’ll find that earning extra money is much easier than you might have thought.

Even better, you can design your new income stream around the lifestyle you want. You can make money from home or you can choose to do something that gets you out of the house and talking with people.

The key is to just get started earning extra money. Once you’re moving in a certain direction, then you can course-correct along the way. Good luck!

Debt Snowball – The Accelerated Debt Payoff Method

The first time you hear “debt snowball,” you’re likely to wonder: What is it? I will tell you…

Did you ever see How the Grinch Stole Christmas — the classic cartoon version? And do you remember how the little dog-reindeer got stuck in a snowball that careened down the hill and got bigger as it went along?

That’s the same idea behind a debt snowball. The more balances you pay off completely, the more money you’ll have available to pay off each successive balance.

Debt Snowball Explained

Let’s say that you have five different balances that you want to pay off. Naturally, each balance is being charged a different interest rate. And you will owe a different amount of money on each balance.

Here’s what you should not do:

If you have $100 extra to put toward your debt each month, you should not divide the money equally and pay down each of your five balances by $20 each.

This may feel good because each balance is decreasing — but it’s definitely not the most effective way of paying off your debt.

But which balance do you attack first? That’s the question.

How to Decide Which Debt to Pay Off First

Usually, you will want to pay off the smallest balance with the highest interest rate. If your smallest balance does indeed have the highest interest rate, it’s a no-brainer. You pay off that balance first.

Then, after it’s paid off, you take what you HAD been paying toward that debt — add it to your debt snowball — and start throwing it at the next balance in line. Here’s a brief example:

Watch Your Debt Snowball Grow!

Extra Money to Pay Off Debt = $100

Debt #1: Minimum Payment = $50

Debt #2: Minimum Payment = $125

In this short example, you pay $150 toward Debt #1 until it is paid off. You then take this amount and add it to the minimum payment of Debt #2. So $150 + $125 = $275.

You now have $275 per month to put toward Debt #2. As you can imagine, you will pay off this debt even faster than you paid off your first balance because your debt snowball is now much bigger.

Imagine how big it will be by the time you get to the fifth and final balance!

Debt Snowball: Better than Consolidation?

Some will tell you that it’s actually more effective and less expensive to use the debt snowball method to pay off your debts.

This is because consolidating debt often has some costs associated with it: balance transfer fees, management company fees, etc.

If you can manage your own finances, and start your own debt snowball program, you may be able to reduce your debt — and ultimately become debt free — faster than you might imagine.

So what’s next?

You might consider searching Google for a debt snowball calculator. There are some free calculators out there that can help you figure out what order in which to pay off your debts.

Car Debts – Driving Away from Debt

Car debts often eclipse a person’s credit card balances by a long shot. It’s not uncommon to have $30,000 up to $60,000 or more in car debts.

Worse, monthly payments can exceed $1,000 a month — almost as much as a small rent or mortgage payment! This can put a huge strain on your ability to meet all your monthly obligations.

Obviously, if you can reduce your car payments or get rid of them altogether, then it will be better for you financially.

Pay Just a Little Bit Extra

One way to get rid of your car debts is to pay off your loans earlier than expected. It’s actually not that hard to do. Simply pay an extra $10 or $20 a month.

You won’t miss such a small amount of money, but your loan balance will step down faster. You may be able to shave off a few months of payments over the life of the loan.

Downsize Your Car

Probably one of the fastest ways to make your car debts go “poof!” is also the most difficult emotionally. That is to downsize your driving lifestyle.

Instead of driving a new Acura, sell it and get a used Honda. Instead of driving a new Lexus, sell it and get a used Toyota. Instead of driving a new Cadillac Escalade, sell it and get a used Toyota 4Runner.

You get the idea.

By selling one of your vehicles, you can instantly wipe out thousands of dollars in debt, maybe even tens of thousands of dollars. Then, when you purchase a used vehicle as a replacement, your car loan may only be one-fifth or one-third of the old loan amount.

This will not only reduce your debt, but reduce your monthly payments as well — both really positive things if you’re trying to become debt free.

Become a One-Car Family

For most of my 10 years of marriage, my wife and I (and kids!) have shared one car. This is not always possible, but we’ve been able to make it work during different periods of time.

If you have two car loans on two different cars… and you sell one car… you may erase half of your car debts in one fell swoop!

And I can tell you from personal experience that it’s WAY easier to take care of one car compared to two. It’s half the oil changes, half the repairs, etc.

Live Closer to Work

By living closer to work, you may not reduce your car debts, but you will save money on gas, insurance, maintenance, and repairs.

If you live close enough, you may even be able to ride a bike or walk to work. Or carpool.

Some brave individuals have moved closer to work and gotten rid of their cars for good. They use only human-powered and public modes of transportation. And it can work well for certain people.

Others who live in warmer climates may want to trade in their car for an inexpensive motorcycle or motor scooter. Again, this is not for everybody, but it works well for some.

Car Debts Be Gone!

No matter what angle you take, you can quickly get in a better financial situation by eliminating or reducing car debts. Thankfully, once you get over the emotional resistance you may have, it’s actually easy to do.

Here are the four strategies: Pay off your loan faster, downsize your car, become a one-car family, and/or live closer to work. Choose the approach that works best for you.

Currency News – Time to Take on Debt?

The currency news mill is working overtime.

There have recently been more predictions of the imminent collapse of the U.S. dollar. And for good reason. According to some sources, a U.S. default is now certain.

Other sources say that the financial oligarchy — the true men in power in the U.S. — are preparing to drive the value of the dollar down by 30-50% in the next 12 months.

I’ve actually already seen the images of the plates for a new North American currency that could be released by the end of the year (2010). There are no dead presidents on these bills, but rather pictures of each of the founding members of the Federal Reserve.

How’s that for creepy?

No matter whether or not the rumors of a new currency are true, the future of the dollar isn’t looking good. And if it continues to decrease in value, it’s going to spell trouble for Americans. Which is why I think you have to ask yourself…

What If the Currency News Is True?

If the currency news is true, then that means our buying power is going to decrease during the coming months. Which means that we will not be able to buy as many products and services with the money we earn.

It could also mean that your income will go up. But this will only be an illusion of progress. While your income may increase, it most certainly will not increase as quickly as the prices of goods and services will increase.

Now let’s see how this relates to getting out of debt.

Your debt is essentially a fixed number, assuming that you are not incurring debt and you are making all your minimum monthly payments.

But in an inflationary situation, your income may be going up, as well as the prices of everything you normally buy.

This means that it will actually be easier to pay off your debt later with dollars that are worth less. I have read of stories where people paid off their homes in a just a few short years once hyperinflation kicked in.

So if I expect that we will see rapid inflation this year, it doesn’t make much sense to pay down my debt a whole lot. It makes more sense to wait and pay back the debt with cheap dollars that are easily obtained.

Protect Yourself from Inflation

In the mean time: I suggest you use the dollars you have right now to hedge against inflation. In other words, buy tangible goods… things that you think you will need this year and next.

Personally, I’ve used some zero-interest loans to acquire physical goods. I’ve done this with the expectation that the goods themselves will be worth more than dollars will be worth in the near future.

Also: I’m buying gold and silver. Owning precious metals will protect you from inflation in the months and years to come. I have already bought silver myself, and I believe this was a wiser way to spend my money than to pay down my debt.

This is just what I did, and it’s not intended to be financial advice, nor should it be considered as such. You will have to do your own research and due diligence before making any financial decisions.

Staying on top of the currency news is always a little bit discouraging… and exciting at the same time. I hope you’ve found this information helpful and interesting.