So the holidays are over and for most of us they were either a family fun get together filled with time of for joy and celebrations. Flying, driving or staying home and having relatives come to visit and share time and thoughtful gifts with each other.
Now, in other 10-15 days the bills will come in from all the time we spent either online and/or at the malls and boutique shops buying that perfect gift(s) just right for that person. The only problem is we do not have the money in our bank account to pay off these bills and all the other “regular” bills that come due in the beginning of the month. You know the rent/mortgage, utilities, car payments etc.
Well, since they went on your credit card(s) the good news is you do not have to pay back the entire balance this month, or next month, or the month after that either. In fact, if we pay just pay a little more than what the minimum monthly payment is, our credit score will not go down, and we will eventually get those gifts paid off…right?
Well, here is an interesting question to ponder. Who are you accountable to for paying off these bills? I do not mean the credit card companies. Naturally, we have to pay them back. However, is there a person, a husband, a wife or a parent that we are accountable to for paying off our debt? My guess is that for 95% – 98% of all us, there is no one we are accountable to for our spending habits. I mean, after all, we are adults here now aren’t we. Why should I have to report to anyone what I do with my own money?
And there is lies the problem. Because we are not responsible to anyone on how we spend our “hard-earned” money, who is to tell me how I spend it?
The federal government has been making credit card companies act more responsible in reporting on their monthly statements to you exactly what interest rate you are paying, how long it would take you to pay off your debt if you only paid the minimum monthly payment, and how much money you are paying each month in interest rate payments. Before, these would either never reported, or would be in the fine print on page three of your billing statement. Now, it is right there on page one. Yet, how many of us pay attention to it.
It can be too depressing to look at sometimes. So, what do we do? We go online and make a payment or write a check and mail a payment in, and put it all behind us because, we are not accountable to anyone about our money.
However, as a parent of three teenage children and a blog writer for financial well being and debt, our children are accountable to us as to how they spend their money and never going into debt. It is our hope that when they do become “of age” they will want to have someone they are accountable to regarding their spending habits and their ability to purchase items with a credit card without ever having to pay a penny in interest rates.
So far, for two of the three, they stayed within their budgets, purchase the gifts (of gift cards) for their gifts, and do not owe anybody anything after the holidays. What if we could all say that?
Therefore, my 2014 proposal for finances and debt is to find someone, a parent, a best friend, a spouse, anyone you feel comfortable with about sharing your spending habits with, and ask them if they will help you become accountable when it comes to spending “your money.” I know it sounds a bit strange, however look at the bright side. You may not be dreading opening your credit card statements this month or next or you may not be falling further into “the debt trap.”
On another note, if you did negotiate or have a company negotiate your debt down from what you originally owed to a creditor in 2013, creditors have until January 31st to mail out to you a 1099-C stating the amount of money the IRS views as income you received that you did not pay taxes on. If you are unfamiliar with a 1099-C and do your own taxes, you may want to consider this the year you seek out professional help with an accountant or CPA when calculating your taxes.
The IRS states that if you are insolvent, in other words your liabilities are higher than your assets; you may be able to forgive paying taxes on the amount stated that you owe. We are not tax consultants or advisors. Therefore, it would behoove you to seek professional advice, should you receive a 1099-C for the forgiveness of debt.