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5 steps to getting your finances in order
by Drew Harris

In our world of dizzying change, nothing is more true than the time honored statement that circumstances always change.

No where is this more true than with financial issues.

Have you ever borrowed money, or charged up the VISA card at Christmas, all the while telling yourself that you would pay everything off with a coming tax refund or bonus?

Sound familiar. And then what happens when the bonus money arrives?

Let me guess..circumstances changed, the car needed brakes (or the kids needed braces, etc), and the VISA debt and interest charges keeps piling up.

Unless you have a plan, you will always be caught in the unpredictable grip of "changing circumstances."

This is a slippery slope that can very quickly become serious financial stress. Consider the fact that Americans are declaring bankruptcy at record rates. One in every 100 families is affected by a bankruptcy.

I was on this slope 10 years ago. Declaring personal bankruptcy and filing for divorce went hand in hand.

One of the most insightful moments of the process was preparing a written log for the trustee of all of our spending for the 5 years leading up to bankruptcy.

While all of the individual decisions made sense in the moments that they were made, they looked totally foolish in the context of the "bigger picture"

In other words, constantly changing circumstances drove us off our financial roadmap.

Consider this five step plan for getting on, and staying with, your financial roadmap.

Step No. 1: Make a list of what you owe & prioritize. Put all your bills in a pile. Then list your debts in order, starting with the largest balance first. Then prioritize your repayments (ie paying down the highest interest rate first).

Step No. 2: Eliminate credit cards and don't roll over balances. Once paid off, notify the company that you want to close the account.

Step No. 3: Make a spending plan. Change your free-spending ways. Track the money that's coming in and going out. Use a debit card instead of your credit card.
Download your bank transactions into a computer program for easy categorizing.

Step No. 4: Be careful about the equity in your home. Billions of dollars worth of equity has been withdrawn from millions of homes in the last few years. But many people pay down credit cards only to charge them up again - and then you don't have the safety net of the equity in your home.

Step No. 5: Get help. For some people, the problem of overspending is a psychological one. Spending can become a habit that's as difficult to kick as alcohol, drugs or gambling. Sometimes, it's due to circumstances they truly could not avoid: medical bills or divorce or loss of a job.

You can talk with a credit counselor on a private basis. It only appears on your credit report if you enter their debt repayment program.

During this holiday season, as you consider your finances, remember that Americans are now carrying $683 billion in revolving credit card debt. 47% of the people who paid less than the full amount on their credit card bills in a recent month, made only the minimum payment due.

The good news is that planning and professional help will definitely help you turn things around.

Case in point: I went from bankrupt with zero assets living in a boarding house, to gainfully employed, running my own home based business, with 2 houses and excellent re-established credit.

In other words, it can be done.

About the Author
Pay-off-debt-now.com is run by Drew Harris and is a one-stop-shop web portal for those facing crushing debt issues. Multiple pages of resources, referrals and tools.
Expert advice on credit cards, loans and avoiding bankruptcy. http://tinyurl.com/4bbum

Before Taxes Are Due

The first step in getting your taxes prepared is to set aside some time to collect the information you know you'll need. Typical items include your return from last year, your W-2 forms from work, any tax related documents pertaining to your investments, mortgage and property tax statements, receipts for charitable deductions, etc.

Once you have gathered all the information, you can determine what IRS forms you'll need to complete your taxes. Will you need any special tax forms? For example, if you're self-employed, or if you have complex investment income, you'll need to complete additional forms.

"Obviously, you want to maximize the amount of money you can deduct from your taxes, while obeying the law and paying your fair share of income tax, says Maxine Sweet of Experian, a company that provides consumers with products and resources to help them understand, manage, and protect their personal credit profiles. "The more deductions you can claim, the smaller your total tax bill will be, so it pays to know if you qualify for any deductions."

If you've had any major changes in your income this year, such as an inheritance, an investment windfall or the like, you may want to hire a tax professional to help you sort through all the legalities. For those who feel they need a little coaching to get through their tax forms, a good tax preparation computer program can be useful.

It may seem obvious, but any changes in your personal life may affect your taxes. Did you get married or divorced in the past year? Did you buy a house, have a baby, or send a child off to college? Any of these circumstances can affect your tax return. If you have questions, visit www.irs.gov for more information.

April 15

The sooner you calculate your income tax, the sooner you'll know whether you owe Uncle Sam or he owes you (or in a perfect world, that it's a draw). If you qualify for a tax refund, the sooner you file your return, the sooner you'll see your check from the IRS. You can even file your return online for a faster turnaround, if you don't mind paying a fee for the convenience and speed.

Another advantage of having your taxes finished early is that if you owe money to the government, you have some time to figure out how you'll pay. You can pay in installments, pay by credit card, or if it looks like you won't be able to come up with the funds on time, you can file for an extension. To use an installment plan or get an extension, you still need to file the correct forms by April 15. "Before using your credit card to pay, review your overall household finances to avoid any surprises, such as exceeding your credit limit, Sweet advises. "That review should include bank statements, credit card billing and a copy of your credit report. You can get a copy of your credit report from Experian at www.experian.com."

After You're Done

Once you've finished your taxes for this year, take some time to think about what you could do differently for next year. If you spent a lot of time tracking down your tax documents this time, create a filing system that works for you and be prepared for next year. Start using a better system now to collect important information throughout the year, and stick to it.

If you owed money this year, or if you have a huge return coming, you may want to consider adjusting your withholding amount. The goal should be to break even. While getting a refund may seem like a good deal, you've basically been loaning the government money at zero interest. Increasing the allowances you claim so less is taken from each paycheck means more money in your pocket each month. If you owed this year, decrease your allowances so more money will be withheld from your paycheck and you won't have the same unpleasant surprise next tax season.

Investing in tax deferred accounts such as a Roth IRA, or in pre-tax investment programs such as a 401(k) or a standard IRA can not only help you save for the future, but can also provide benefits at tax time. If you don't currently use these investment tools, take some time to investigate how they might work for you.

Use your return wisely. While the temptation is to consider a tax refund "found money, resist the urge to spend it on a trip or a new sofa. Instead, why not invest it or put it in the bank? If you are carrying credit card debt, apply the amount of your tax return to paying off what you owe.

While April 15 will probably never be anyone's favorite day of the year, a little planning and forethought can make it easier to cope.

For more information on learning about your credit, visit www.experian.com .

Courtesy of ARA Content