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It is effortless for debt to overwhelm a young professional in this era and age. You feel that you need the money and many institutions are seemingly willing to lend it to you but at what cost? Without the right advice and proper planning, debt can take over your life. Here are three comprehensive yet straightforward ways to stay out of debt.
Steer Clear of Credit Cards
Credit cards have proven to be a temptation most young people cannot withstand. Owning one to use in case of emergencies or to raise your credit rating sounds like a good deal, but all this changes the minute you start to spend.
Those credit card companies that were so warm and friendly when you were getting your credit card aren’t your friends. They are businesses whose primary goal is to turn a profit. If you are not careful, you’ll end up maxing out your card in a short time and booking yourself into a virtual prison.
Once you own a credit card, you are required to pay both minimum payments and compound interest. If you do not pay your bills, you will become liable to pay fees for being late on a payment. Higher interest rates may apply to your card, and it may even get frozen altogether. Continued failure to make payments may see your debt sold to a collection agency who may sue and get a court order to put in place a garnishment of wages.
File Your Income Tax Return
Filing your tax return is a serious matter, and you may find yourself in a lot of trouble for not filing as you should. You should always file before the deadline. If you do so more than 60 days after the deadline, you will be liable for a penalty that can be as high as 25 % of the tax you haven’t paid.
Woe unto you if your tax return is deemed to be fraudulent. Your late filing penalties will be increased instantly and can go up to 75% of all unpaid debt. If you haven’t noticed, one mistake with this process will send you spiraling down an unfortunate pit of debt and penalties.
That is not all. Failure to file an income tax return is a federal crime that can be termed a misdemeanor or a felony, depending on your luck. This will not look good on your credit rating and may even stand in the way of getting a job. If you do not seek help from a professional, things are bound to get out of control.
Pay Your Student Loans
Student loans are the only way for most young people to get into college and one of the primary reasons most young people are struggling financially today. Like in procuring credit cards, these loans may seem too right to be accurate, but they are not. Read the fine print to determine the interest rates, how much you will be expected to pay back, and any penalties that may accrue from failure to do so.
To avoid digging deeper into debt with your student loans, make timely payments to reduce your debt. This involves a lot of financial discipline because if you are out there buying cars and taking out mortgages simultaneously, you are going to run into a cash hold up one way or the other. Prioritize your responsibilities and deal with them strategically.
Seek Help When Needed
There are plenty of resources to help you if you need it. LifeBack tax is a tax relief company that offers help to people struggling with debts owed to IRS and even State tax. We have a highly trained team of professionals comprised of attorneys, agents, and case managers to cover all the problems you might have. Whether you are struggling with tax liens, back taxes owed to IRS, or any related issue, you are guaranteed to find relief with us. Call us today for a free consultation, and let us resolve all your tax-related problems.
Even the best of us find ourselves tied to a few debts now and then; it is nothing to be ashamed of. Educate yourself on ways to reduce your debt. If you feel stuck or unable to handle your issues by yourself, seek help from a trusted professional.