Not a lot of progress this month with paying my debt down but I was able to transfer the remaining balance from Citibank card at 16.99% to another card at 0.99% through March 2010. The following debts are listed in the order I am working on eliminating them:

debt0309

I have a couple of other low interest rate offers that I may take advantage of in the next month or so, but in the meantime my immediate goal is to pay the minimum on all of the debts and throw as much as I can at American Express.

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More Free Stuff…Download a FREE 2009 Tax Guide from Smartmoney.com

So apparently you can NOT completely stop having Federal Income Taxes withheld from your paycheck as I had ASSumed from setting up my Estimated Quarterly Taxes through TurboTax. Hey, what do want from a Moron. I’ve been advised that you can increase your personal exemptions on your W-4 to a seemingly outrageous number (like 10 or 13) to greatly reduce the amount of federal taxes withhled but there are penalties for stopping the withholdings all together.

I had already planned to meet with a CPA after tax season is over to review my recently filed return to see if an amended return is necessary, get professioanl advice on how to handle my taxes the rest of this year, and have my taxes done by a professioanl from now on…this latest confusion only solidifies my decision.

For a few hundred dollars a year, I no longer have to waste hours of my time filing my taxes and, even more important, I can relax knowing that they were done right and I’ve minimized the amount of My Money that the government can waste.

Jean Chatzky’s new book, The Difference, is available to download for FREE from Oprah.com through 10:00AM ET Saturday March 14th.

Of course, You have to register on oprah.com to access the download…I could feel the testosterone draining from my body as I did…but I’ve whored myself out for less so no big deal. That’s what extra/garbage email addresses are for and like the old saying goes, “If it’s Free, It’s for Me”!

Well, Monday I received my K-1 Statement from our company accountant and was able to finish my tax return and file electronically through TurboTax that night. The next day I received a notice that my refund will be direct deposited into my checking account on Friday March 20th.

Also, I have decided to stop having federal income tax withheld from my monthly paychecks and instead I will begin paying Estimated Taxes quarterly. Because I had federal income taxes withheld the first 2 months of the year, the total tax to be divided into the four quarterly payments was significantly reduced. So now when I get paid each month I will have to put aside a specific amount in a easily accessible savings account so that each time my quarterly payment is due the money will be there. Additionally, because my quarterly payments were reduced the amount I will have to put aside each month is much less than the taxes I was having withheld freeing up additional cash for debt reduction.

Between getting my taxes straightened out so that I’m not giving Uncle Sam a large tax free loan throughout the year, trying to stick to a budget, and reigning our expenses, I finally feel like I’m starting to get control of my finances.

IRS Witholding Calculator

February 25, 2009

I completed my taxes using TurboTax as soon as I received my W-2 a month ago, but I haven’t been able to file my taxes as I haven’t received my K-1 statement for my dividend distributions as a principal in an S-Corporation. So I am impatiently waiting to file for my refund. In the meantime, I visited the IRS website andused the IRS Withholding Calculator to determine the correct number of exemptions to claim on my W-4 so that next year I am not sitting around waiting on such a significant refund.

Debt Reduction Methods

February 21, 2009

I’ve been reading a lot of PF Blogs and websites about debt reduction lately looking for some tips that will help expedite the process of paying off my debts. It amazes me how so many people feel strongly about what they consider the “best” way to pay off debt. Dave Ramsey’s Disciples tout his Debt Snowball as the “only” way to do it, paying off debts in order from Smallest Balance to Highest Balance. Many of the more mathematically inclined PF Bloggers tout the traditional method of paying off debts beginning with the one with the Highest Interest Rate, which I’ve now seen referred to as the Debt Avalanche method. One of my favorite Bloggers/Podcasters, NCN, has even combined the two methods and coined it the Debt Deluge, where he first lists the debts Lowest Balance to Highest Balance then draws a line at the midpoint and reorders the lower half (Highest Balance Debts) from Lowest Interest Rate to Highest Interest Rate. Sticking with the Snow theme, still others tout the increased momentum of Snowflaking – throwing all extra money picked up during the month that is not already earmarked for a budget item and throwing that at your targeted debt as soon and as often as possible.

These are all great ideas that help organize and focus your debt reduction plan. I am one of those people that feels that Personal Finance is just that, Personal, and whatever works best for you is the best method. For me, I have set up a plan that is essentially a combination of all of these methods that makes the most sense for me. But sorry, I haven’t given it a snow-related name yet. Perhaps I should call it the Snowbank , the Snow Storm, or something clever like the S’no More Debt method.

Anyway, being a numbers-guy, my brain won’t allow me to pay a debt with a low interest rate before a higher interest rate…especially if they both have a high enough balance that neither will be paid off in the next few months. So I have to pay off my higher interest rate debts first, but I don’t just list them and start there. I first try to consolidate my debts and transfer the balances of the highest rate debts to a lower interest rate card. This in effect allows me to set up a Debt Snowball (paying my lowest balance debt first) that also happens to be a Debt Avalanche since now my largest balance debt is also my lowest interest rate debt. Sounds like a no-brainer to me, especially if you are able to get a VERY low interest rate (0.00% – 1.99%) with NO or a reduced balance transfer fee. Here is an example of what I’ve done below.

debtfeb09

So I will be concentrating on the Citi MC which has the highest interest rate and the lowest balance. Also, with the combination of them having recently bumped the interest rate up to 16.99% from 9.99% due to “the current tough economic conditions” they are experiencing (After receiving BILLIONS of our tax dollars) and their CRAPPY CUSTOMER SERVICE,I am determined to pay off that balance as quickly as possible.

I will also look into transfering additioanl debt from either the Citi MC or the Amex Blue to take full advantage of the lower rate and start to quickly throw money at the higher rate debts.