I have been trying to pay off my cc debt for and am in year 2 of a 5 year plan. I have cut expenses, raised income, use only cash and debit cards, etc. I have just hit a depressing snag and trying to figure out how to move on.I am a contract employee who was slated to roll off my contract March 30 but thankfully given a 2 week extension, job ends April 13. Looking furiously for work, may have a part-time gig starting May 1 and looking for full time work but to be safe, I am anticipating having to go 4-6 weeks without work. I have put some money in savings to fund this but it's a bare minimum amount and will only cover my basic expenses for a month, will not include:$2700 payment to IRS for 2006 (I miscalculated income taxes but have now hired an accountant as TurboTax was my previous method)$1400 payment to pay off a motor scooter which I have a 0% interest until May 2007 (then it jumps to 20% on the full amount which was $2900)The old Me would have just moved these amount to a credit card, but the new Me refuses to get into more debt. Some Options:Tax Payment: Option 1: File deferred payment plan and pay back the IRS over the next year (YUK but a possibility). Option 2: Get a new job ASAP and use my savings to pay the taxes (am aiming for this but need a backup), Option 3: cash out a tiny Annuity fund I have which would probably just about cover this amount.Scooter Payment: Option 1: move the amount to my 6.9% credit card, Option 2: Sell the scooter (can probably sell for $2200) - this is my current mode of transportion to/from work but I have other options.Psychologically I cannot make more debt from myself, I already feel like this debt payoff is taking decades and it's only been 2 years. Am I missing any other options?
Ouch - sorry to hear about your job loss. Hopefully you will find something else soon and it will just be a small stumbling block on your debt-free journey :-)For the tax payment, I don't know what kind of payment plans the IRS offers but unless the terms are usurious, this sounds preferable to me than either cashing out the annuity OR depleting your savings; it will be easy enough to snowball this away when you secure steady employment, but I would feel uncomfortable going into a new job without at least a small cushion. You never know what will happen, what if you have to wait a month to get your first paycheck, etc. You don't give any details about the annuity but is this part of your retirement savings? I wouldn't want to touch that except in a true emergency.For the scooter, selling it might work but only if you are 100% confident that you will be able to get to work using your "other options" (public transportation?) Will it limit where you are able to take a job if you don't have this means of transportation? If this is the case, I would roll it over onto the 6.9% CC until you know what your new situation is, to avoid getting socked with that 20% retroactive interest (ouch!) You can always sell the scooter a month or two down the road if you decide to, and pay off the CC.
1.) Setup a payment plan with the IRS. Since the amount is less than $10,000 they must accept a payment plan. Request a 5 year payment plan. You can pay it off earlier when you have a stable job. For now it will minimize your cash flow. 2.) Since the scooter is your main transportation, selling it is probably not a good option. Move the balance to your credit card. It is not "new" debt. You need to move the balance before they retroactively assess interest. Once the balance is moved, you have time to consider your options. Debra
Thanks for your reply. I actually contract for a living so I didn't lose a job, my project just ended and I had intended to take a few weeks off I just forgot about the timing of April 15 and the scooter payment is due May 26 so I have some time on that still. I have another contract coming up in May but it is part-time and will only cover living expenses. I hope to do that plus another full-time contract or perm work, either one, I can just make more money on contract (i.e. no benefits but I have those through my husband).I can carpool with my husband, that's the other option, or public transport if I work in certain areas of the city. My hope is that I land a new job/contract besides the part-time one by May 1 so I can just use my savings to pay off the scooter and I love the 5 year payment plan with the idea of defintely paying it off as soon as I have the money, I won't let it go 5 years. Thanks!!!
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