Don’t be an ostrich.

In debt and don’t know where to turn? There are ways to get out of debt. All of them require a painstaking accounting of what you owe, being honest with yourself (and sometimes others) and conceiving a plan to get you out of debt, either by yourself or with help. It is a very traumatic, scary, time-consuming and ultimately unburdening process. And it is completely worth the effort.

There are several ways to deal with debt, from credit counseling to payment plans to consolidation to bankruptcy. You can also be an ostrich and do nothing, but that’s not recommended: Your creditors will not go away, no matter how long or well you ignore them. Better to go through a process no matter how agonizing.

One of your first steps might be to check out the IRS must-do list, which includes an explanation of credit counseling and debt management programs and a list of your responsibilities.

The IRS also offers consumer facts for debt consolidation or counseling. Scroll down to the section entitled, “Tip-offs to Rip-offs” for information that can protect you from scams. We quote directly from the IRS site:

“Steer clear of debt negotiation companies that:
· guarantee they can remove your unsecured debt
· promise that unsecured debts can be paid off with pennies on the dollar
· require substantial monthly service fees
· demand payment of a percentage of savings
· tell you to stop making payments to or communicating with your creditors
· require you to make monthly payments to them, rather than with your creditor
· claim that creditors never sue consumers for non-payment of unsecured debt
· promise that using their system will have no negative impact on your credit report
· claim that they can remove accurate negative information from your credit report.
“If you decide to work with a debt negotiation company, be sure to check it out with your state Attorney General, local consumer protection agency, and the Better Business Bureau. Also, ask your state Attorney General if the company is required to be licensed to work in your state and, if so, whether it is.”

Now, where do you find these agencies and how do you know they are reliable and honest?

The National Foundation for Credit Counseling (NFCC) is a nonprofit organization founded in 1951 and has strict regulations for its members. There are more than 100 member agencies and 850 offices nationwide. You may also use their services online. They will recommend a solution they believe is best for you (and you can bet it will not be the ostrich method!). They also offer consumer tools, including a budget worksheet (this is excellent), calculators, consumer tips, a podcast of “Credit Counseling 101”, and a “financial facts” video. We’ve found these agencies wonderful to deal with, understanding and knowledgeable.

And, last but not least, the ever-reliable About.com offers 10 pages of articles about debt consolidation. However, note that the ads that surround these articles may not be recommended by About.com; they’ve paid to be on that page.

No one can tell you what the best solution is for you. You will have to do your due diligence, and that takes time, effort and a bit of organization. You can do it, however, and it is worth your while to invest your efforts in your own financial future. – Alice Rose Kieft

Tax Time!

Yes, it is that time of the year again. No, not “spring forward” (although it is that, too), but tax time!

I gave up doing my taxes myself years ago. That was the year I got a note from the IRS asking when I had had a child, because I mistakenly had taken a deduction for one! I was 50 at the time. I double checked my return, and, sure enough, I put the “1” in the wrong box! So, I now have someone else do them, but I don’t have a whole lot of money, so I use one of these:

VITA: The IRS Volunteer Income Tax Assistance Program and the Tax Counseling for the Elderly (TCE) Programs offer free tax help for taxpayers who qualify. Community volunteers are trained to help with special tax credits, such as Earned Income, Children, Elderly or Disabled. Most sites also offer online filing so you can get your refund sooner than if you mail it in.

So, if your income is below $49,000, check out the VITA site list online (and it needs updated, so if you are not near a site, call (800) 906-9887 to ask if there is a site near you.)
There are companies that offer “free” programs that help you file online, but note they don’t necessarily help if you don’t understand something. This list was taken from About.com (one of my favorite informational sites):

· TurboTax Freedom Edition The free version of TurboTax is available to filers with adjusted gross incomes of $30,000 or less. TurboTax also provides free state tax filing for residents of Alabama, Arkansas, Arizona, Georgia, Idaho, Iowa, Kentucky, Massachusetts, Missouri, Minnesota, Mississippi, Michigan, New York, North Dakota, North Carolina, Oklahoma, Oregon, Rhode Island, South Carolina, Vermont and West Virginia.
· H&R Block's TaxCut TaxCut is easy to use and fast, but it requires Internet Explorer. Adding a state return costs $24.95.
· TaxACT TaxACT is easy to use and accurate, and the company has frequent offers to upgrade to its deluxe version. State returns are an additional charge.
· CompleteTax This software is fast and pretty user friendly. State returns are an additional charge.
· TaxEngine This one is user friendly. State returns are an additional charge.
· TaxSlayer If you used TaxSlayer last year, you need to know it has been has been redesigned and is now faster, and not as many screens to get through to the end result. If you do your federal return there, the state return is also free.

If you are not sure which program to use (or which one you are eligible for), the IRS offers Free File, a program that will help you get the best one for you.

In Illinois, the Military Service Tax Preparation Project will match local volunteer certified public accountants with military personnel or their families. Please access the Web site to see if you qualify.

Refund Anticipation Loans (RAL): In 2007, 8.7 million people paid high interest rates to get loans in the amounts of their tax refunds, paying them off when their tax refunds arrive. The companies that offer these Refund Anticipation Loans made close to $9 million from the interest they charged.

A CFA-NCLC (Consumer Federation of America /National Consumer Law Center) study showed that, on average, the interest, fees for loaning the money, for electronic filing, for check cashing and for tax preparation totals about 40 percent of the refund.

The three largest RAL providers are H&R Block (which arranged 4 million RALs in 2006), Jackson Hewitt (1.3 million), and Liberty Tax Service (about 260,000). Before you decide to take one of these loans, please check out the above Web sites so you know what you’re getting into.

Stay in touch. We look forward to hearing from you. –Alice Rose Kieft