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If you are one of the millions of Americans who still owe Uncle Sam a lot of money or if you are receiving a refund and want to know how to use it wisely, help is available at Consumer Credit Counseling Service of Western PA (CCCS). CCCS is a local nonprofit, community service organization that provides confidential counseling, guidance, debt management and education programs to financially troubled consumers. CCCS offers private and confidential budget and debt counseling at one of our community-based branches or in the privacy of your home with our convenient telephone counseling. CCCS offers the following tips for consumers who are receiving a refund:
Open an emergency savings account. Many people live from pay-check to pay-check and have to borrow money if a crisis occurs. Having an emergency fund allows you to use cash for unplanned expenses rather than a high interest credit card.
Pay off high-interest loans first. If you plan to pay off debt with your refund, pay off debts that have the highest interest rates first. Typically, credit cards have a higher rate of interest than mortgage or car loans.
Get professional debt reduction advice. A tax refund may not be big enough to solve a serious debt problem. If you can only make the minimum payments on your credit cards, you are likely to be still paying on the same debt 10 to 20 years from now! If you are incurring late and/or over-limit fees, your debt may be increasing by as much as $70 per month per card! If these situations sound familiar, you may need professional help or advice.
CCCS offers these money management tips for consumers who may have taxes due at filing: Decide how to pay. Research your options. Some options include a bank loan, an IRS installment plan and an IRS approved credit card. You’ll pay interest on a bank loan, a processing fee and interest on an IRS installment plan and convenience fees plus interest to American Express, Discover and MasterCard – the approved IRS credit
card companies.
Determine how you will pay off the loan. You can make a bad situation worse by falling behind on your tax loan payments. Make sure that you can live with the terms before you sign. Otherwise, you could incur penalties and late fees.
Change federal withholding. Many people with large tax bills simply didn’t withhold enough from their paychecks during the year. Still others sold stock and failed to budget for the capital gains tax. Correct both scenarios and avoid similar problems next year.
See a credit counseling professional for help. Treat your tax shortfall as a wake up call to get your finances in order. The credit counselors at CCCS of W PA would be happy to review your finances.
If you need additional information on budgeting or debt management call CCCS at 1-888-511-2227 or visit us at our website – www.cccspa.org. |
