The One with the Tax Fiasco: Joan’s Mid-February Financial Update


Note: This is a post from Joan Concilio, Man Vs. Debt community manager. Read more about Joan.

As of today, our total debt stands at $59,120.48. That’s down $1,331.37 from last month and $30,566.75 from the start.

We’ve officially paid off more than $30,000 in debt.

We also found out Friday that we’re officially going to need to pay the IRS $7,104 by April 15 thanks to a withholding “issue” related to one of my non-Man Vs. Debt streams of income.

Scary? Well, yeah.

But Chris and I had a big Financial Planning Brainstorming Session last night, and we decided something important: We’re not going to let this derail us, and we’re not going to let this increase our debt level.

Will our paydowns slow a bit for a few months? Yep.

Will our savings and emergency funds take a hit? Also yep.

Will we ramp up the payoffs again and rebuild that savings ASAP? YES, a third time.

Our plan for the next two months

So, $7,104. That was the magic number we sat down and planned toward, and it’s a full 50% of the money we have coming in during the two months until our deadline.

We realize that we could set up a payment plan for the taxes owed, but that’s “new debt,” and our goal is not to incur new debt. Instead, we’re going to tap a few sources.

  • $1,761 – Amount currently in our savings/emergency fund. This is the account we’re going to put all our “taxes due” money into, and we’re willing to use the already-existing funds in the account for this purpose, with a goal to replenish it back to this amount afterward.
  • $2,511 – Amount currently in a separate savings account we’d started in the past couple years for potential future educational expenses for our daughter, Sarah. We’ve taken action to withdraw this money into our “regular” savings account, also with the goal to save the same value afterward, though probably in a different form.

So that gets us to $4,272. That means $2,832 has to come from… somewhere, between now and April 15. Our plans for that?

  • Pay the minimums on our 6 consumer-debt accounts for the coming two months. That will take care of between $1,500 and $2,000 (depending on payment dates), because we pay about $1,000 over our minimum each month.
  • Sell some bigger-ticket crap. We’ve listed a snowblower and a futon so far and have a couple other items in the pipeline. Our goal here is to make $500 to go toward the tax bill.
  • Side hustle. We expect to be able to bring in another $400 minimum from side gigs in this two-month period, but we’ve got lines out on some ways to up that to closer to $800.
  • Eat the cushion. No, it’s not a new grocery-cutting measure. We’d built up a cushion of close to $1,000 in our checking account, and while it had dropped already a little bit, we’ve consciously decided to run a “zero budget,” meaning we want zilch left in the checking account right before payday. Instead, we’ll be funneling anything at all extra into the emergency account.
  • Spend less. This takes a few forms. Some of them are things like putting off haircuts; canceling our Valentine’s Day dinner reservations; evaluating the gifts we’ve already bought for our daughter’s 13th birthday next month and realizing it’s enough already, even though we had a couple other gift ideas in mind; that sort of thing. Some are larger-scale cuts, like deferring some work around the house we’d saved up for (say goodbye for now to a driveway that doesn’t eat my car tires and grows more grass than my yard…).  And some are just minor economizing measures, like watching our grocery budget a little more carefully and making sure we’re turning out lights when we leave rooms.

This might actually be overkill. In other words, we might be successful enough at all these economizing and money-making measures that we end up with money still in the savings account. And that’s just fine! We’ll have some lean months even after these, so it will be good to have a buffer of any sort!

So then what?

The good news is, even paying the minimums, our debt balances will go down. Not much, but they’ll be going the right direction, even with interest factored in. The bad news is, to help prevent this same fiasco next year, we’re going to make some changes to our tax-withholding arrangements in some of our income streams. Net result: A good deal less take-home pay for the last 8 months of 2013.

That’s OK. In fact, another good conversation Chris and I had is that, until we’re free of the credit-card debt, we want to be extra-careful with our withholdings and estimated taxes, even if it means giving the government the same kind of interest-free loan I mentioned we try to avoid.

Things will be different once we’re debt-free, but until then, we definitely don’t want to have IRS debt to worry about!

After we get through April 15, the plan looks something like this.

  • Adjust tax withholding to prevent next year’s issues. Subsequently, adjust budget to match new (lower) amounts take-home paychecks!
  • Rebuild savings account back to $1,700+ (more than one month’s mortgage payment) over 3-4 months.
  • Restart payments above the minimum to credit-card companies, first in slightly lower amounts as we rebuild the emergency savings, and then at as high of a rate as our budget can take.
  • Rebuild checking-account cushion back to $1,000 over 6-8 months.

So our updates for the next couple months might not be super-exciting on the debt-payoff front, but I will be doing them, and I will DEFINITELY be sharing our progress on saving for that tax payment!


Will you stick around to cheer me on? We could use your support!

77 thoughts on “The One with the Tax Fiasco: Joan’s Mid-February Financial Update”

    1. Jonathan, yes, very unexpected! There was a problem with some withholdings we had set up from one of our other sources of income, and essentially money we thought was going toward taxes wasn’t. Unfortunately this is one area I have to be a little more vague than usual about, because it involves people beyond our family – but the short version is, we had thought we’d come within about $500 this year (neither get a large refund nor pay in more than that) for the 2012 tax year!

  1. Your dedication and determination is admirable, and inspiring. I really appreciate the fact that you specifically mention having important talks and making these big decisions with your husband–so important for the future! You and Chris seem to be a great team.

    1. Lily, thank you so much! I am VERY blessed to have Chris as a “teammate” in this fight – I know so many people who do not have the support of their loved ones, and I’ve had a joint-finances relationship in the past that was very different than this one (guess that’s why this one is forever, huh?!) 🙂

  2. Wow, you guys are doing great even when you
    have a bump in the road. You are
    really determined to get out of debt and
    I know you will. Instead of just grumbling
    about your situation you are brainstorming
    to see how you can take care of the situation
    and make it better. The lessons your daughter
    must be learning are priceless.

    1. Rebecca, thank you more than I can say for those kind words!! You also hit something I didn’t mention in this post but have talked about before – this wasn’t a “secret” in any way. We talked openly with our daughter about what this will mean and our plan. We’re big money-openness proponents and she is not only on board, she’s going, “We can do this!” How cool that our almost-13-year-old is part of the family team!

  3. It looks like you have a good plan to overcome the situation.

    We found ourselves in a similar situation with last year’s taxes, but at least I got some extra time to figure it out. This is what happened…In August, 2011, I was reading something and it occurred to me that I would have a huge tax bill the following April. We bought a house in 2008, and took the First Time Home Buyer Credit. For those who are unaware, this was basically a free loan of $7500 from the Federal government. The tax payer (me) got a one year delay, then had to start repaying the loan at $500 per year with my taxes for the next 15 years. The only caveat was that you had to live in the house, which was exactly what we had intended, but life happens.

    I was in the Air Force when I purchased the house. I retired in October, 2010, intending to work in the same area. Well, I could not find a job in that area. I interviewed for several jobs, but did not get any offers. In the meantime, I refinanced the house the month after I retired, which reduced my mortgage by about $150 per month. In late November, I was offered a job in another location, so we moved and I started work in December. I really didn’t want to sell the house after just refinancing it. I figured it would take about 40 months to pay the closing costs, so selling wasn’t really an option. For those of you who think military retirement is very generous, think again. I know I could not support my family on a little over $2000 per month, so I really needed additional income and had to take the job, even though it involved a move.

    So once we moved, I rented the house and the clock started ticking on repaying the loan. I paid the first $500 with my 2010 taxes, but I would have to pay the remaining $7000 the next year. As I said earlier, I figured this out in around August, 2011. At the time we were paying down debt, and we still are. I knew I had about eight months left, so I started saving $500 per month to put towards the tax bill. This would give me $4000 and I figured that would hopefully be enough. I was in a new job and guessing at how my taxes would work out, i.e. whether or not I would get a return. When I finally got the tax bill, it was a little over $6000. I was able to come up with the additional $2000 and pay the taxes, but I never want to go through anything like that again.


    1. Paul, UGH! Not ugh to how you dealt with the situation, but just… ugh! In one way, it makes me feel good to realize that we’re not alone and that sometimes, even with good planning, things just “happen” that you have to deal with, sometimes in the form of large sums of money!

      And I am INCREDIBLY happy that you were able to pay yours off too – and that you had some time to put the money aside. (But even more, that you TOOK the time you had and actually did it – how many people would look at it and go, “We should put aside $X a month” but not really do it? Sadly, I think too many!)

      You rock for tackling that – but I’m with you, I NEVER want a situation like this again!

  4. You’re sticktoitiveness is inspring. I appreciate how you refuse to take on extra debt in spite of the situation. Keep up the good fight! It pushes the rest of us to do better. 🙂

    1. Angie, wow! Thank you so much! My hope in sharing our story is simply to GIVE hope that it can be done, and if that helps motivate you to keep at the fight, well, WOW 🙂 That feels good, and I am so thrilled to have you cheering us on!

  5. Well, hello there Joan!!! It’s been a month or so, but glad to catch up with your progress. First off, the real trooper comes through per expected;). If anyone can jump start this, it’s you and Chris! Already aligned with your next 6 months plan . Way to go!!!! I KNOW there will be funds left over in your savings when all of this comes to fruition……that’s how you roll 😉
    I’ll be watching and cheering you on to victory. Email me !

    1. HI THERE WONDERFUL! 🙂 You are so nice to us as always! I cannot wait to be through this mess and on the other side, but in the meantime, I’m just going to keep going – nothing else to do, right?!

  6. First off, booooo on tax surprises. I have a distinct unhappy feeling when I think about taxes. Guh. That being said… GO YOU! You have a PLAN, solid numbers (which I know are cake for you), and actions you can take between now and April 15th to ensure this is covered. I think this puts you above like… 287% of the US taxpayers population? (Fake math, I love it).

    Seriously Joan, this is really heartening to read. Maybe there was a little panic involved, and more than a little stress, but you are on top of this and it’s so impressive! 🙂

    1. Liz, your fake math makes me incredibly happy. 🙂 I know you know me – because you nailed it. There was some panic. Some stress. But we are not going to give in to that piece of it when the BIGGEST picture is – we are still getting out of debt! Maybe not quite as fast, maybe not quite the way we wanted, but we ARE doing it!

      I feel like we need a fight song that I can cue right there. 🙂

  7. Hi Joan,
    I am always encouraged by your updates as they relate to real life. Often times people just tell you the good stuff and leave out the every day life trials. With God on your side you will get through this, if you continue to trust him. I love your plan and I know you will succeed!! Keep the stories coming..

    1. Dani, thank you more than I can say! I know I spent a LOT of time yesterday (and all weekend) in some serious prayer about this and I’m actually amazed at the sense of calm and purpose that pervaded everything. (I know I shouldn’t be – but it is still amazing when it happens!) Thank you so much for your amazing support and prayers and good wishes for us. I can’t even say what it means!

  8. I can really relate to Joan’s plight. I was thinking I would be debt free (not including mortgages) in early 2013. Along comes Tax audit stating I had failed to file my return correctly. $3,300.00 was the amount I owed. No dispute whatsoever, IRS was correct on a mistake I made. I have until March 24 to pay. I will have it. The reason it affects me as that is just about the amount I needed to pay off the remaining consumer debt. I was on track to pay that off by May 1, 2013. Oh well, just as you, we adjust, maintain and/or intensify our focus and continue onward. Good luck to you! Congrats on the $30,000+ paid off. That put’s you at about 1/3 complete. Keep it up. Can’t wait to read you are 2/3 complete!!!

    1. Matt, you are AWESOME!! I cannot wait to hear your celebration when you do get there. It’s a setback, not a forever thing – and I love that you realize that! Way to go… and thank you again for the kind words!

  9. Joan is my inspiration. My husband and I have started paying down our debt although both of us are finding it hard to keep on track with not incurring new debt…because of both bad spending habits we’re struggling to tame and then getting derailed by the unexpected. I don’t even want to go into what our starting point was, let’s just say “bigger than Joan’s”–ugh.

    1. R.A., wow… you made my day! And don’t worry about “bigger than Joan’s…” if it hadn’t been for some really amazing things going on in our lives, ours would have gone a couple years more and been bigger exponentially – I’m just amazed at how life works and how things turned around for us.

      The important thing is that we’re all going in the right direction now – and I cannot wait to keep celebrating with you. Please, please, please keep us posted on your progress! I know it’s hard but … you can do it!!

  10. You can do it Joan! We have had our share of tax surprises, I commend you for not going into debt for it. A LARGE chunk of our debt is tax debt. While we have a plan to pay all of our debt off by 2016, I get a special pit in my stomach over the tax debt. We have been very strict this year about putting away 25% of every dollar that comes into our businesses. But… ahhh!!!… what if it isn’t enough?… ahhhhh!! Your plan here gives me hope that if we have a tax surprise- we can handle it without more debt.

    1. Leah, I have to admit – I have always said, no matter how much I hate BoA and our other debts, I’d rather owe ANYTHING but taxes. And as it turns out, that’s true! 😉

      I am so thrilled that you guys are tackling yours, setting aside a good amount this year, and not freaking out (too much) about potential future problems. We’re in the same boat – we have done the math 10 times over to see how to deal with the rest of this year, but we worry too, “What if it isn’t enough?!”

      You nailed it, though – you CAN handle it if it isn’t. You will! And you’ll still be debt-free in a few years and we’ll be celebrating together!

  11. Of the several financial blogs I read, I find your posts to be the most helpful, have the most “meat”. My debt was from an expensive divorce and recurrent custody fights ($56,000 so far), never from careless spending. So many tips/advice/ how-i-did-it stories don’t even remotely apply to me, as I don’t spend money in those ways and have never had family support as a safety net. Your methods, candor, steps you take, etc. ARE useful and very motivating. I most look forward to your posts/updates than any one else and look forward to your next update. Thank you!

    1. Aleesa, thank you so much for saying that! I, too, find that a lot of advice gets into things that were never a problem for us, not that we didn’t have some fat to trim in our budget but that wasn’t really where we “got” into our situation!

      Thank you so much for letting me know that what we’re doing is helpful – I am certainly going to keep it up and I really love knowing that it helps!

  12. Joan,
    It sounds like you have a GREAT plan in place to attack this new debt. I feel your pain…on our worst tax year, I think we owed around $12,000. Somehow we managed to pay it, but not in the way you are going about it. You are an inspiration to us all!!!

    1. Carol, thank you so much – and WOW on that worst tax year, I can’t even imagine!! The good news is, it got paid, right?! 🙂

      You rock. Thank you for being here with a kind word – that means more than I can say!

    1. Michael, that was a big no for us – because it’s new debt! No way! But you’re right – that IS an option for other people to think about if they’re in a similar situation!

  13. You are doing great trying to get the debt down. I just hope that until you build back up the ER fund that nothing crazy happens. Good luck and keep up the great work.

  14. Joan,

    First off all, congrats at making a plan to go around this boulder. Without a plan, you might run in circles. (A traveler in ancient Greece, the story goes, met an old man walking along the road and asked him how to get to Mount Olympus. The old man, who turned out to be Socrates, replied: “Just make sure that every step you take is in that direction.”) Unknown Author

    I have to ask, have you sought a 2nd opinion on your taxes? If an automechanic told you you had a previously unknown 7k repair, wouldn’t you get a 2nd opinion? Tax laws are large and vague. I know many people who have saved thousands (myself included, 10k+ last year alone) by going to a 2nd expert. There are so many legal loopholes, tricks and tips that it would be impossible for one tax consultant to know. I strongly recommend seeking an expert in tax withholdings and side income. It may cost a few hundred bucks, but could save you much heartaches and many extra months on your debt free plan. (you may find a tax expert that will give a free consultation that pushes you in the right direction.) Even if they only save you their fee at least you’ll know the amount is correct.


    1. I was my own second opinion (my background is in mathematics and specifically financial accounting) – the thing I didn’t say is that this is the result of some effort on the part of me and two accountants, it was actually MORE before (and we were able to avoid all penalties and won’t have to pay federal estimates this year)! So your advice is well-taken – I’m glad we sat down and went through all that and dropped it down to “just” this amount!! 🙂

  15. Joan,

    Thank you SO SO much for your candid honesty in regards to your finances. It so encouraging to see someone in the midst of paying off their debt! So often I read about people who have already made it happen. All the debt gone. But you help me feel less on my own with this debt thing. My husband and I have started our major debt diet only a month ago and we have quite a long road ahead. Thank you again for being real and being here.


    1. Diana, you guys rock – you have taken THE HARDEST step already and it does get easier. I’m so glad to have you walking alongside us and I hope you’ll keep sharing YOUR updates too so I can cheer you on in return!

  16. Well done Joan – you are an inspiration – seeing all these tax issues in the USA makes me happy to be living down in New Zealand!
    Keep up the inspiration and notifications as you inspire me to be a better person with my money.

    1. Lisa, thank you more than I can say! And while I generally love my country pretty hard-core, I definitely had some less than kind words about it this weekend.

      My husband’s response was, “Let’s move to Canada. At least your taxes get you better healthcare?” I hear from my Canuck friends that’s a mixed bag too, but hey, I figure everywhere has its ups and downs! 🙂

  17. Ouch! That’s rough. I love your positivity and perseverance in your recent posts when it comes to challenges. It sucks, it’s not fun, but you have to make do. You are doing a great job!

    1. Thank you so much – you just made my day! We’re really trying to stay upbeat – and it’s made MUCH easier by everyone’s support here. I am not too proud to admit I need the “gold stars” and the cheering section! 🙂 Thank you so much!

  18. You’re an inspiration. You’re taking money saving and paying off debts to feel like a board game. Kinda like the game of “life”. Keep up the great work and thanks for sharing.

  19. Some other penny-pinching ideas that I’ve resorted to include rain-harvesting, reusing plastic baggies, reusing-vacuum bags, foregoing all haircuts (my kids’ hair is down to their waists, including my son’s!), shopping for all clothing at Goodwill (and only once or twice a year), wearing clothes, esp pants, more than once (no need to wash them unless they’re stained, really…), drying all laundry outside (waiting for sunny days), using only cold water in the washer and using half as much detergent, sharing socks with my kids (we’re all similar in size), no eating out, no going out, no movie theater, etc,.

    I have reduced our monthly expenses on our water bill by purchasing an high-efficiency/low water usage washing machine when our previous one died, using a credit card that gave a cash back bonus, plus buying it in a month that doubled that reward, AND a machine that gave us a tax credit. My last water bill saw a drop of 18%, and I only do 3 two loads a week now, instead of 6, due to the huge tub!!

    I’ve always been a penny pincher and have survived on a median income in LA County. When my husband lost his 2nd, part-time job, I was forced to become creative in the money department. It’s been a tough 8 months, but we have survived so far, even with the increase in the price of everything including our taxes.

  20. You and Chris WILL jump this hurdle also. You have a plan. Based on your newsletters, you stick to your plan! Life has a little habit of hitting below the belt, and you hit right back at the problem. Encouraging on in your faithfulness to pay off your debt.

    1. Cay, thank you so much – I can’t say how much your encouragement means to us! By the way, Chris is reading these comments too and he is just as floored and thankful as I am! 🙂

  21. You can do it!

    It seems like your plan has been working and you have a pretty big income to break down that debt pile with.

    I’m picking at my own debt pile with a small pickaxe but it’s inspiring to read posts like this!!

    1. Thanks! It’s not so big of a pickax here – I do feel like we’re blessed to be dual-income earners plus side streams, but the trade-off is in hours worked; I once figured that on Chris’s salary (no overtime for him), he makes something like $8.50 an hour, which is kind of rough!! 🙂

      Keep chipping – we’ll both get there eventually!

  22. We also owe, and that is despite buying a house last year! Why? Because my husband made a heck of a lot of overtime, and it bumped us way up. On the one hand, that was great (we were able to save all that OT and have a down payment sooner), but now we’re getting whopped with a bill. Now that he’s salaried instead of hourly, we should be better. No OT. 🙂

    1. Amanda, or, as I tell my husband, “All the free overtime you want!” 😉

      Seriously, I hate that that happened, yet I’m glad you got the down payment as well!

      1. I know. It’s good and bad, you know? If he hadn’t’ve gotten the OT, we’d still be saving for a house. As it is, now we’re in the house! So it was worth it in the end!

        (But yes, of course he still works OT…just doesn’t get paid for any of it!)

  23. Your posts are very inspirational because you’re like a lot of us. I was reading another financial blog and although he talks about saving money and side hustles, he gives updates about his financial status which is around 6 digits. I’m sorry, I have plenty of other blogs I can read by very wealthy people. Having someone who has 3-4 digits and has struggles like yours and how you deal with it really helps. Thanks and hang in there.

    1. Dave, THANKS!! That means a lot – and I am definitely hanging in there better for all the help and support you guys are giving us. We appreciate it!!

  24. First of all Joan, you are so focused and you budget and work with a plan – you are so far ahead of most people in this country that I know that you can do it. Absolutely – no doubt in my mind!! And that is exactly what an emergency fund is for – so many people say, why do I need to put so much money aside…. well, because life has a habit of throwing curveballs at us, and without an emergency fund and a plan – it could have knocked you down! But it didn’t and it won’t, because you’ll be way past it before you know it!!

    Just going along with what some other people have said – I love reading your posts… not because I am in debt. I am not. The only debt I have is a mortgage on a rental home that is underwater, but my own home is paid off. But I am working hard to pay down that mortgage so I can get rid of the rental property which is costing me so much more than what the Rental Income I get covers.

    My issue this year is to find a way to make enough income so that I can ‘dump’ my hated, unhealthy “day job” by Aug 1st – the date that I either have to return from my 2 year long medical Leave of Absence, or resign. I’m very nervous, and don’t know if I will be able to earn enough, but I am trying to rid myself of every possible expense while at the same time trying to develop multiple streams of revenue so that it will work. Keep your fingers crossed for me.

    And if I may suggest a topic for a future post? I would love it if you would share with us what multiple streams of revenue you and Chris have going. What you’ve tried, what’s worked well, what hasn’t… maybe others could share as well. I’m looking for new ideas of things that I can do to generate revenue too.

    OH — and PS. If I told you who my hated and unhealthy “day job” is with, you would laugh so hard – since it is a company that you just hate too!!

      1. Well, they did make me “ill” enough to warrant a 2 year Medical Leave of Absence – so I’m not a fan of them either!

        Thanks for the link to the post about the side hustles – I had not read it. Some good stuff there to make me t hink!!

  25. My taxes were the most complex they’ve ever been this year, but I still did them myself and your post makes me really nervous!

    Hang in there. Maybe put a tip jar up on the site so that people can show their love!

    1. Hahaha, Mike, maybe you want to buy 7 memberships to You Vs. Debt? Perhaps 57 copies of Sell Your Crap? 😉 LOL.

      I bet your taxes came out fine – but I’ll be crossing my fingers just in case!

  26. Hey Joan!

    So sorry to hear about the tax setback! I love the fight song idea- music definitely helps me battle back!

    I’m always inspired by your posts and always learn so much. Thoughts and prayers headed your way!!

  27. Thank you Joan for sharing. You go girl! I am here to cheer you on. I have not made my tax appt yet nervous that this year might be the year we cut it too close.
    Good Luck! and keep us posted.

  28. Joan,

    My first thought was TERRIFIC PLAN! Second thought was “gee, if they owed that much tax, must be doing pretty well with the other income stream” I wish I could find an income stream like that! I am struggling to pay taxes on my real estate income…less you think its massive, it was a whopping $17,000 last year and that was my BEST in 6 yrs, but with the self employment taxes and all the expenses involved I really should consider doing something ELSE.. Its figuring out the ELSE that I struggle with.

    Congrats to you and hopefully you will continue to grow your business!

    1. Jody, thanks!! The problem is that it isn’t for ONE income stream. We have a whole bunch, and for various reasons, the way we set up some of them to cover withholding for others of them didn’t work out (and in fact ended up with us withholding LESS than we did in the past). When you put the various sources of income together for Chris and I, we’re JUST over the threshold for six figures combined – but we withheld through the year what was barely enough for a couple making $50,000. Yeah… that’s bad. 🙂

      As you say, though, it’s a good problem to have in one way – means you’re making money, right?! 🙂

      I would love to encourage you to figure out what you truly want to be doing! I know it’s hard – I’m not even sure I’m all the way there yet on that, but I’m a lot closer than I was 2 years ago, which at least helps. I’ll be thinking of you – and I hope you’ll keep us posted!

  29. Joan
    I stumbled upon your website by googling “simple”. That’s interesting since you have a simple, common sense approach to liquidating your debt. I am more impressed with your following…Impressive. We too st rated out with a huge debt load of around 80,000 not counting the car loans and mortgage and down under 50,000 now.
    I would like to share a couple of things we have learned. Cancelling interest on high interest debt can help speed things up a lot. We opened a line of credit at the bank that we use to do this. Example. We take out $1000 and apply to the principal of a high interest loan. This knocks off a huge amount of interest on the back side of the loan thus reducing the amount we owe and the time required to pay the debt off.When we get paid we deposit either all or part of the money back into the line of credit (LOC). The interest on using the LOC for a short period of time ($4-5) insofar better than paying the high interest rate on the debt. The money is back in the LOC ready for use again. You have to have to have a little extra money left over every month for this to work because your still paying out money but not that much.
    Put a pencil to it and see how it will work for you. And good luck on your debt

  30. Pingback: The Taxes Are Paid: Joan’s Mid-April Financial Update

  31. Dear Joan,
    I love your articles. Am with you all the way, but I did want to mention my experiences of witholding tax or, as I use to do, putting money aside to cater for the tax at the end of the year. In the UK most of my taxes came to around 30%, so I used to put aside 33% of each paycheck, regardless of my deductable expenses. I had a seperate savings account, generating a bit more interest, and would put the money in there, so it would harness interest during the year. I nearly always found I had save far more money for tax than I needed to pay, because of course allowable business expenses would reduce my tax burden, so this left me with a nice little starting pot of money for the next tax year. I am not sure how you handle paying towards your taxes in the USA – are you effectively paying your taxes forward to the IR??? – but if you can put the money into a BANK or SAVINGS account that has a higher interest rate, the money will earn you more. We have accounts here that require a notice period so you can leave the money there all year, as they have higher interest rates. You just give the required notice to get the money out. As you will always know when your tax is due, this ought to be do-able. I hope this is useful! Blessings and keep it up. PS We got out of debt and it was transformational. This year, I handed the entire responsibility for our finances to my husband – for the first time ever – and am really enjoying NOT being the one who has to take care of it all. I was originally the only one paying attention, and could never get my other half to join me.Then, when I confronted him (in utter exasperation) with how bad things really were, so that he could not deny it, we worked through it together. Now, he is in charge (for a bit) and it is doing him some good!! My, how things change!!! The trust between us has been entirely rebalanced. It has been a real learning exercise. 🙂

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