6. Income Taxes
You must pay federal and state income taxes that are not automatically deducted from your wages. You must file your federal and state income tax return, even if you cannot afford to pay any balance due. Failure to pay taxes on time can result in penalties and eventually wage garnishments. To find out about payment plans or to negotiate a settlement with the IRS, visit IRS.gov or visit your local IRS office.
7. Unsecured Debts
Some months, it’s simply not possible to make ends meet; despite your best efforts. If you just don’t have enough money to meet your monthly obligations, communicate promptly with your creditors to explain the situation and request assistance or extra time to pay. These accounts may include credit card bills, doctor and hospital bills, or other merchant accounts. Explain that your financial situation is precarious, you’re unable to make the payments but you’re working towards a solution. You have not pledged any collateral for these loans, so you are not in jeopardy of losing property. However, these creditors do expect to be paid back. So understand that collection efforts can be persistent and stressful.
Understanding the basics of prioritization is an essential aspect of money management. Ideally, you would always have enough money to cover all of your monthly expenses and still have some left over to save. However, there may be times when you simply don’t have enough money to pay all your obligations, and that’s when you must take the emotion out of your decision making process.
For advice and information on debt management, visit the Federal Trade Commission.