If you are insolvent, then you can complete and submit IRS tax form 982 with your tax return and you will not have to pay this tax. Someone who is considering debt settlement should be insolvent, otherwise they should pay the tax, which they still save more money than paying 100% of their debt, plus the interest during that time.
My husband and I live frugally. We buy many of our possessions used and I make everything from bread to yogurt completely from scratch. We live in a small house and do not buy our son expensive toys. I think people would be surprised by our six figure income level.
I have an unlocked iphone I use on Tmobile. The voice plan is $39.99 and tzone web which provides me with full internet access at decent speeds was only $5.99. Oh and the iphone cost me $200 on craigslist.
How easy to use is the Samsung Jack? That is the real beauty of the iphone. You can pick it up and start using it w/out having to read a manual.
You also failed to mention all the cool games out there for the iphone. Also it has a fully functional ipod for music and videos. Other phones may be able to play music and video but the simplicity of navigation on the iphone/ipod is second to none.
I was an interesting case. I earned big money, yet you would not have thought it. My entire income (and that of my wife) was sucked up in debt repayments. We lived like we were unemployed virtually. Always scrimping here and there to make ends meet. I tried my best to keep the outward appearance of wealth but I'm sure the cracks showed towards the end.
Now, I still earn the same money, and you still wouldn't think it! But it's now a GOOD thing. I'm all but debt free, 80% of my income gets put to one side and I still live like I'm unemployed. It's just that now I call it being frugal!
We're living on a very tight budget (husband is a full-time student), and it's pretty obvious to our (middle class) friends - we often have to turn down invitations to go to the movies or out to eat. My hope is that maybe our insistence on living within our means will result in our friends spending less in return. We'll see.
Some friends would be shocked because it is so low, others because it is so high.
In talking with family and friends in other states, I've noticed that what is considered a "normal salary" can vary widely depending on the cost of living. In the DC area (where I live), a $30,000/year salary for an entry-level job on the Hill is shockingly low given the cost of living (and given what an entry-level job earns in the private sector in this area, which is closer to $50k). In contrast, that same salary in other, more low-cost states would be shockingly high, especially for the entry-level.
So yes, people would be shocked to hear what I make!
As a former Borders employee (now at an indie), I gotta add that this is totally on-point. Not only are people who do this annoying the employees, but they're also (in the cases of books where we don't carry a lot of copies) making it more difficult for other customers to find and purchase the books they're looking for. Most of the people who do this kind of thing end up damaging the books, which means we have to send them back to the distributor. Even if the book isn't damaged, we still have to re-shelve it, which means we're not as available to help customers.
Even large chain booksellers are hurting in this economy; if you want ANY bookstores to stick around, stop undermining their ability to stay in business.
Most libraries now carry many, many copies of popular new books on their release date, and allow online holds on a book that's still "on order". This means you can place a hold on a new book well before the release date, and go in to pick it up on the day it's released in the bookstores. For free.
Plus, most libraries receive funding based on usage--the more a community uses the library, the more resources they're able to provide. Your taxes already pay for the library, so it's "frugal" to maximize your usage. And good for your library, too.
We recently updated our wills/trust/etc and the attorney asked in the course of the interview how much money we thought we needed to live on. We responded to him and he looked at us like we were crazy. No way he said. We responded that it was only that much because we had paid for our house and kept our monthly needs way low. No way was that possible according to him. But we just smiled...
OUTSTANDING advice! So many people are not educated about the pitfalls of debt-settlement before somebody convinces them that it is the answer to all their problems.
We are pretty frugal, but out of necessity, and I think that even our close family (i.e. parents/inlaws/siblings) would be shocked (horrified) that we get by on so little, but we do.
I'd like to think that we would keep up the frugality and up the savings when things turn around from a salary point of view, but sometimes circumstance-dictated frugality can leave you feeling hard done by and deserving of more, I hope we will be strong enough to rise above it when the time comes
Some of my coworkers are shocked at how much I make relative to them. A couple strategic moves and a Master's degree before leaving school has left me making at least 10k more than many of my peers. That said, I rent a cheap apartment, have an old, beat-up car and barely spend my money. My friends in similar fields make a little less than I do, but all live in much more expensive areas. I think they'd be shocked to learn how cheap it is to live in a dying state.
The problem my fiance and I have is that everyone already knows how much we make and projects their own assumptions about our lifestyle. Then when we fail to meet those assumptions (by, say, spending just $5k on a wedding, as opposed to a lot more - which we could afford but is not aligned with our values), many seem very confused and wonder where "it all must be going." It's going into savings - for a house, for early retirement, for lots of things that don't include buying a lot of junk.
We are constantly fighting a culture of spend-it-if-you-have-it.
None of our friends would be surprised because we tell people - what we make, what we save. I feel like secrets about salary are part of what drives people to make bad decisions - they see other people spending and they think 'well, i'm the same kind of person that person is!' Also I like to counteract the idea that everyone has debt, that it's inevitable.
But other people would be shocked, I think. My son's friends families are generally quite a bit poorer because we live in a working-class neighborhood. An ex-con who worked in the cafeteria at my old job used to offer me a ride home because he felt bad for me waiting for the bus. Also I know our neighbor can't quite wrap his head around what kind of work you could possibly do from home sitting in an office chair - every year he asks at least once if I'm working these days.
I'm shocked, in turn, when I find out that a family that clearly struggles with debt and always complaining about not having enough money has the same income my family does - and that happens pretty often. Suze Ormond says people have a margin of safety they feel comfortable in regardless of how much they make, and more and more I think that's true.
I use several of the tips provided - dry, coat with baby oil, and store away from moisture between shaves. Following these steps really does make a difference. I also use a device that helps speed up the process, and makes it more convenient for me - the EverAfterShave razor protector. Today is Day 131 with the same razor blade, still sharp and shaving great. I think that your goal of one year with the same blade is achievable!
We are perceived as having a lot of money even though we don’t.
We’ve literally had family come knocking on our door for “loans” and are then surprised and even visibly upset when we tell them we don’t have the money to spare. Problem is they look around our house (nice house in good neighborhood, nicely kept and appointed) and it doesn’t help. Finances are definitely a topic that is now completely off-limits with everyone and family are no longer allowed in our home (money is literally the only reason they come knocking, even long lost cousins and uncles show up at the door).
One topic that I would like discussed is how to determine when and with whom to disclose your financial habits and lifestyle. We’ve sat down with both family and friends to get the word out on frugality and good financial health and how we work to death the little money we have (we have no qualms letting people know we scour the thrift nearly daily to score that great find, or that 90% of the items decorating our house are thrift finds under $10 or $15, Setting up an emergency fund, how to look for high interest savings to stash cash, etc.) but all they see is money they think we have that they don’t and they want.
I'm not in this predicament right now, but my younger sister's fiance is. If you took out federal student loans before 2006 (not sure if that's the right year) and if you're still paying on them 25 years later, they'll be forgiven. Does the income idea still apply to student loans? I'm positive that neither of them have thought of this and I don't want my sis to get in any more financial problems than she already is in. Thanks for the info.
This sounds like a good search tool! I just wish I knew about it when I planned my trip to NYC months ago. We ended up staying with a friend's family so it worked out fine but the next time I go, I want to stay in a hotel close to Times Square. Does the website have it where you can enter landmarks to find hotels close to a specific location?
Over the past 25 years I've probably earned around $3 million total. Today my net worth is $400K at best...not horrible but far from what it could/should be. I'm doing my best to make up for lost time and teach my daughter so she doesn't make the same mistakes. But if I could only go back and do it over...
I used to have a BB (it was just OKAY). I busted my Verizon contract to SWITCH to an iPhone when I calculated that it was about $80 a month CHEAPER. I love my iPhone and all that it does for me.
I work a white-collar job at an elite college. However, my wife stays home with our children which means that in the end, I'm probably the poorest person in our office (including the receptionist, whose husband works). It produces some internal tension, but I wouldn't trade my life for anything -- it's worth it to live according to our values and we find a lot of joy in it!
There's an app that will let you send a photo of a check to deposit into your account. It'll save you the hassle of going out to the bank, and you save some gas too!
We live in a 3400 sq ft home, 3 acres, 3 kids- I stay home, my hubby works full time. 3 cars, big garage- my hubby's hobby is racing. Our oldest daughter went to Germany last year and we are involved in alot of activities- all of this on about $35000.00 a year. I know that we make less than most of our friends and family- but money isn't everything!!
Probably. I'm honestly surprised I am able to pay my bills each month with how bad everything has been. Though I may be forced to move as the cost of living is going up exponentially where I live. It's gotten so expensive that my electric bill literally doubled, and now progress energy wants to almost double it again. Making it so that the electricity in a one bedroom apartment would total a whopping $200+ dollars. Unfortunately, I'm a bit stuck with hardly any savings and a boyfriend who's in school for another year. I know I need to get out of where I'm at and I'm trying to find ways to save money and not be terribly miserable. I'm just praying that I'm given a door to a better place.
If you are insolvent, then you can complete and submit IRS tax form 982 with your tax return and you will not have to pay this tax. Someone who is considering debt settlement should be insolvent, otherwise they should pay the tax, which they still save more money than paying 100% of their debt, plus the interest during that time.
With an iPhone, you can also dump your internet at home if you don't use it often. That'll save you a few clams each month.
My husband and I live frugally. We buy many of our possessions used and I make everything from bread to yogurt completely from scratch. We live in a small house and do not buy our son expensive toys. I think people would be surprised by our six figure income level.
I have an unlocked iphone I use on Tmobile. The voice plan is $39.99 and tzone web which provides me with full internet access at decent speeds was only $5.99. Oh and the iphone cost me $200 on craigslist.
How easy to use is the Samsung Jack? That is the real beauty of the iphone. You can pick it up and start using it w/out having to read a manual.
You also failed to mention all the cool games out there for the iphone. Also it has a fully functional ipod for music and videos. Other phones may be able to play music and video but the simplicity of navigation on the iphone/ipod is second to none.
I could go on and on...
I was an interesting case. I earned big money, yet you would not have thought it. My entire income (and that of my wife) was sucked up in debt repayments. We lived like we were unemployed virtually. Always scrimping here and there to make ends meet. I tried my best to keep the outward appearance of wealth but I'm sure the cracks showed towards the end.
Now, I still earn the same money, and you still wouldn't think it! But it's now a GOOD thing. I'm all but debt free, 80% of my income gets put to one side and I still live like I'm unemployed. It's just that now I call it being frugal!
We're living on a very tight budget (husband is a full-time student), and it's pretty obvious to our (middle class) friends - we often have to turn down invitations to go to the movies or out to eat. My hope is that maybe our insistence on living within our means will result in our friends spending less in return. We'll see.
Some friends would be shocked because it is so low, others because it is so high.
In talking with family and friends in other states, I've noticed that what is considered a "normal salary" can vary widely depending on the cost of living. In the DC area (where I live), a $30,000/year salary for an entry-level job on the Hill is shockingly low given the cost of living (and given what an entry-level job earns in the private sector in this area, which is closer to $50k). In contrast, that same salary in other, more low-cost states would be shockingly high, especially for the entry-level.
So yes, people would be shocked to hear what I make!
People would be shocked to know my income.
Lots of it goes toward legacy decisions from before I was frugally-minded, though.
As a former Borders employee (now at an indie), I gotta add that this is totally on-point. Not only are people who do this annoying the employees, but they're also (in the cases of books where we don't carry a lot of copies) making it more difficult for other customers to find and purchase the books they're looking for. Most of the people who do this kind of thing end up damaging the books, which means we have to send them back to the distributor. Even if the book isn't damaged, we still have to re-shelve it, which means we're not as available to help customers.
Even large chain booksellers are hurting in this economy; if you want ANY bookstores to stick around, stop undermining their ability to stay in business.
Most libraries now carry many, many copies of popular new books on their release date, and allow online holds on a book that's still "on order". This means you can place a hold on a new book well before the release date, and go in to pick it up on the day it's released in the bookstores. For free.
Plus, most libraries receive funding based on usage--the more a community uses the library, the more resources they're able to provide. Your taxes already pay for the library, so it's "frugal" to maximize your usage. And good for your library, too.
We recently updated our wills/trust/etc and the attorney asked in the course of the interview how much money we thought we needed to live on. We responded to him and he looked at us like we were crazy. No way he said. We responded that it was only that much because we had paid for our house and kept our monthly needs way low. No way was that possible according to him. But we just smiled...
OUTSTANDING advice! So many people are not educated about the pitfalls of debt-settlement before somebody convinces them that it is the answer to all their problems.
Thank you for posting this excellent resource!
We are pretty frugal, but out of necessity, and I think that even our close family (i.e. parents/inlaws/siblings) would be shocked (horrified) that we get by on so little, but we do.
I'd like to think that we would keep up the frugality and up the savings when things turn around from a salary point of view, but sometimes circumstance-dictated frugality can leave you feeling hard done by and deserving of more, I hope we will be strong enough to rise above it when the time comes
Some of my coworkers are shocked at how much I make relative to them. A couple strategic moves and a Master's degree before leaving school has left me making at least 10k more than many of my peers. That said, I rent a cheap apartment, have an old, beat-up car and barely spend my money. My friends in similar fields make a little less than I do, but all live in much more expensive areas. I think they'd be shocked to learn how cheap it is to live in a dying state.
The problem my fiance and I have is that everyone already knows how much we make and projects their own assumptions about our lifestyle. Then when we fail to meet those assumptions (by, say, spending just $5k on a wedding, as opposed to a lot more - which we could afford but is not aligned with our values), many seem very confused and wonder where "it all must be going." It's going into savings - for a house, for early retirement, for lots of things that don't include buying a lot of junk.
We are constantly fighting a culture of spend-it-if-you-have-it.
None of our friends would be surprised because we tell people - what we make, what we save. I feel like secrets about salary are part of what drives people to make bad decisions - they see other people spending and they think 'well, i'm the same kind of person that person is!' Also I like to counteract the idea that everyone has debt, that it's inevitable.
But other people would be shocked, I think. My son's friends families are generally quite a bit poorer because we live in a working-class neighborhood. An ex-con who worked in the cafeteria at my old job used to offer me a ride home because he felt bad for me waiting for the bus. Also I know our neighbor can't quite wrap his head around what kind of work you could possibly do from home sitting in an office chair - every year he asks at least once if I'm working these days.
I'm shocked, in turn, when I find out that a family that clearly struggles with debt and always complaining about not having enough money has the same income my family does - and that happens pretty often. Suze Ormond says people have a margin of safety they feel comfortable in regardless of how much they make, and more and more I think that's true.
I use several of the tips provided - dry, coat with baby oil, and store away from moisture between shaves. Following these steps really does make a difference. I also use a device that helps speed up the process, and makes it more convenient for me - the EverAfterShave razor protector. Today is Day 131 with the same razor blade, still sharp and shaving great. I think that your goal of one year with the same blade is achievable!
We are perceived as having a lot of money even though we don’t.
We’ve literally had family come knocking on our door for “loans” and are then surprised and even visibly upset when we tell them we don’t have the money to spare. Problem is they look around our house (nice house in good neighborhood, nicely kept and appointed) and it doesn’t help. Finances are definitely a topic that is now completely off-limits with everyone and family are no longer allowed in our home (money is literally the only reason they come knocking, even long lost cousins and uncles show up at the door).
One topic that I would like discussed is how to determine when and with whom to disclose your financial habits and lifestyle. We’ve sat down with both family and friends to get the word out on frugality and good financial health and how we work to death the little money we have (we have no qualms letting people know we scour the thrift nearly daily to score that great find, or that 90% of the items decorating our house are thrift finds under $10 or $15, Setting up an emergency fund, how to look for high interest savings to stash cash, etc.) but all they see is money they think we have that they don’t and they want.
I'm not in this predicament right now, but my younger sister's fiance is. If you took out federal student loans before 2006 (not sure if that's the right year) and if you're still paying on them 25 years later, they'll be forgiven. Does the income idea still apply to student loans? I'm positive that neither of them have thought of this and I don't want my sis to get in any more financial problems than she already is in. Thanks for the info.
This sounds like a good search tool! I just wish I knew about it when I planned my trip to NYC months ago. We ended up staying with a friend's family so it worked out fine but the next time I go, I want to stay in a hotel close to Times Square. Does the website have it where you can enter landmarks to find hotels close to a specific location?
Over the past 25 years I've probably earned around $3 million total. Today my net worth is $400K at best...not horrible but far from what it could/should be. I'm doing my best to make up for lost time and teach my daughter so she doesn't make the same mistakes. But if I could only go back and do it over...
I used to have a BB (it was just OKAY). I busted my Verizon contract to SWITCH to an iPhone when I calculated that it was about $80 a month CHEAPER. I love my iPhone and all that it does for me.
I also use the mint.com app to watch my budget.
:-)
I work a white-collar job at an elite college. However, my wife stays home with our children which means that in the end, I'm probably the poorest person in our office (including the receptionist, whose husband works). It produces some internal tension, but I wouldn't trade my life for anything -- it's worth it to live according to our values and we find a lot of joy in it!
There's an app that will let you send a photo of a check to deposit into your account. It'll save you the hassle of going out to the bank, and you save some gas too!
We live in a 3400 sq ft home, 3 acres, 3 kids- I stay home, my hubby works full time. 3 cars, big garage- my hubby's hobby is racing. Our oldest daughter went to Germany last year and we are involved in alot of activities- all of this on about $35000.00 a year. I know that we make less than most of our friends and family- but money isn't everything!!
Probably. I'm honestly surprised I am able to pay my bills each month with how bad everything has been. Though I may be forced to move as the cost of living is going up exponentially where I live. It's gotten so expensive that my electric bill literally doubled, and now progress energy wants to almost double it again. Making it so that the electricity in a one bedroom apartment would total a whopping $200+ dollars. Unfortunately, I'm a bit stuck with hardly any savings and a boyfriend who's in school for another year. I know I need to get out of where I'm at and I'm trying to find ways to save money and not be terribly miserable. I'm just praying that I'm given a door to a better place.