If you’ve been keeping up with us recently, you know we’ve had some unexpected expenses, including my being in an upcoming wedding this weekend. We haven’t made any huge progress where our debt freedom is concerned, but we are looking into things that may help us in the near future.
Our Update For October
The last detailed update we provided on the blog was in August and we were completely stalled. We have made some progress since then, but not a ton. In August, the numbers were as follows…
- My Car Amount Owed: $21,333
- Drew’s Car Amount Owed: $0
- Credit Card Total For Both: $483
- Student Loans (Mine): $24,002
- Matco/Snap-On: $7,543
- Amount in Collections: $679
About two months later, we haven’t seen a whole lot of progress. Here are the updated numbers…
- My Car Amount Owed: $21,302
- Credit Card Total For Both: $502 (interest is a KILLER, folks)
- Student Loans: $24,184 (I had this pushed off until the beginning of the year because my husband has been out of work)
- Matco/Snap-On: $7,449
- Amount in Collections: $679
If you do the math, you’ll see our overall debt has actually increased to $54,116 from $54,040. Unfortunately, this is due to interest rates and, where my student loan payments are concerned, deferring payments.
Despite us still being stalled in many ways, we’ve both been looking for ways to increase our earnings. As you know, my husband was out of work for a bit. He has gotten more steady work and is beginning to get paid regularly again. I was also lucky enough to score an Instagram influencer gig that will bring in an extra $1,200 later this month. That will all go towards paying off some kind of debt.
IRS Tax Debt
One of the biggest things weighing us down currently is my payment arrangement with the IRS. Because I largely freelance for work, no taxes are withheld and I fell behind in 2017 with saving to pay for those. Additionally, I filed for an extension for 2018, which is due later this month. This will only add to my IRS bill.
That is SUPER stressful. Right now, I am paying about $129 per month to the IRS. It will increase slightly once I file for 2018. I’ve been looking into tax forgiveness programs that may be able to assist us, especially since my husband has been out of work so much within the past couple of years.
Total tax debt forgiveness is a myth, but there are a few options you may want to consider if you’re in a similar situation.
- Innocent Spouse – This can give you the ability to claim deniability if your spouse owes a lot of money. It will get you off the hook for the tax bill, but your spouse will still need to pay. This program isn’t for forgiveness but helps ensure the person responsible is the one being billed.
- Offer in Compromise (OIC) – An OIC agreement with the IRS can help you decrease the amount you owe significantly. However, not many people qualify for this type of program. Less than 25 percent of those who apply for OIC each year are approved. You also have to provide very detailed information about your finances, which can backfire on you with the IRS.
- Currently Not Collectible (CNC) – If you really can’t pay anything back at the moment, you can try to request a CNC. To qualify for this program, you will need to be in a situation that would put you in financial hardship if you made the payments. The IRS will revisit your status after some time though, so you may end up having to pay down the road if you become able. Your tax debt “lives” for 10 years.
I’m not moving forward with any of these options yet. I will be consulting a tax professional, however. My husband and I are hopeful we will be able to get some help from a client of his for next to nothing. He has experience getting people off the hook for their tax bills (or finding more write-offs to make the amount owed much less).
For now, we will continue to have our sites focused on becoming debt-free, including this looming tax debt. Readers, where are you in your debt-free journey? I’d love to hear from you in the comments!