Friday, March 21, 2008

The Tax Man Cometh

Okay, so in February I had all of my W-2s and such and went to H&R Block and sat quietly while the guy punched in all the numbers.

When I quit my job, last July, and went back to college full-time, I also cashed out my retirement and Mike and I bought property.

This property is 'the rest of our life' spot.

The feds took out a hefty portion for taxes, but not the state, so we kept a little savings in anticipation.

What we didn't anticipate was that the feds didn't take out enough taxes, so our tax bill at the end of the number crunching turned out to be $28,000.

I was shocked.

I took my stuff home and told Mike on that Friday. Then I said "We won't talk about this today or tomorrow." We simply couldn't. It was way too disconcerting. How on earth would we come up with that sum?

We talked about it a little on that Sunday, but it was still too soon to wrap our heads around it.

Finally, we had to do something. April 15th wasn't getting any further away. I applied for a new credit card and added it to the two we already had. We paid the state with what we'd been saving, and put the rest on three credit cards.

Yes, we realize that the IRS offers payment plans, however . . .

In addition to the fees, penalties, and nonsense of it all, we'd be indebted to the IRS. If we miss a payment there, they can GET US. They could not only get us, but could also get our stuff, including our 'the rest of our life' spot.

So, we opted for the credit card thing. I know that if we miss a payment (which we hope NOT to do) the % rate jumps considerably and we begin to pay more and more, however, they can't GET US, which is our primary concern.

So now, I'm sitting in anticipation of three huge credit card bills and I don't think my income from tending bar is really going to cut it. Ugh.

I am confident, however, that if we're diligent, we can see this thing through without losing our shirts. (I have proven that one can survive on next to nothing and still have money for beer.) It just means buying the super mystery, mystery meat - and the 'guess what this is made of hotdogs.' I have always been a fan of mac & cheese, so that's a plus. However, we'll have to go down the quality list to the Mac and 'almost cheese.'

Fortunately, I'm cutting down on cigarettes, (with a quitting goal) so I'm losing that added expense, and I have enough yarn to keep me occupied in my knitting hobby.

This Summer, Shepherd College isn't offering any classes that I need for my degree, so I could probably put some more hours into working at the bar, (and around the house) - and I'll save on gas, because I won't have to drive to school.

Pros of the extreme belt-cinching...

More time at home.
We still have our home.
A fabulous weight-loss program.
Added incentive to stop buying cigarettes.
Great stories for the niece and nephews. ("When I was your age . . .")
I can one-up a lot of the "you think you've got it bad" stories at the bar.

Your mission, my friends, is to come up with more 'on the up side' ideas.
I think this is going to be a GREAT year.

1 comment:

Stuart said...

Jeez, you got yourself into a pickle, didn't you. I'm sorry, but I don't think this credit card thing is a good plan. The IRS doesn't repossess your home because you miss a single payment. Someone can "GET YOU" any time you're borrowing money. And what interest rate are you paying on these credit cards? If you miss a payment on one of those, you can end up paying over 30% interest. on all of them. Yeah, this is the latest thing, when you miss a payment to one creditor, all the others can use it as an excuse to raise your interest rate for them too, even if you didn't miss a payment to them. My advice would be to go to a real bank and get a real loan, or a second mortgage or whatever, at a reasonable rate, with a monthly payment that you can reasonably afford (no matter how long the term is), and then DON'T MISS A PAYMENT. Once you're done with school and start working full time, start doubling up on your payments, and you can knock that out early. But this interest thing is gonna kill you.