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Get Rid Of Tax Debt In A Way Most People Don’t Know

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Get Rid Of Tax Debt In A Way Most People Don’t Know

While the

global economy continues to showcase signs of considerable growth and diversification, personal debt remains a huge issue in developed countries throughout the world. This is a key legacy of the Great Recession, during which time numerous citizens defaulted on their financial agreements and triggered additional, interest-related debt. Tax debt is another key consideration for citizens in the modern age, especially when you consider the rising number of freelancers, independent contractors and part-time financial traders who are active in 2014. This demographic is ultimately responsible for conducting its own tax assessments and calculating repayments, and many have found themselves impacted by a fundamental lack of knowledge and awareness. coins_refund

    It is important that you look to reduce your tax debt quickly, while also keeping a level head and avoiding such issues in the future. Consider the following steps towards achieving these goals.

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    1. Understand the nature of your debt and identify key resources.

    Before you can start to diminish your tax debt, it is first important to understand its nature. Just as there are multiple tax laws and codes, so too there are several different types of debt and methods of potential repayment. Understanding the full extent and structure of your debt is crucial, as from there you can determine the best and most expeditious resolution. If you are looking for a place to start, consider contacting your country’s revenue and customs regulatory body or an independent website for more impartial advice.

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    2. Create a clearly defined plan of action.

    Once you have researched your debt liability and all viable resolutions, you can begin to create a clearly defined plan of action. This can include one or several points, so long as they are relevant to your debt and help you to move towards a resolution. It is crucial that your plan includes maintaining open lines of communication with the governing tax authority, as this enables you to discuss your options and agree on an amicable solution. Whether this involves making estimated quarterly repayments while your case is being investigated further, requesting a payment extension or scheduling installments, you will at least be able to create a foundation from which your tax debt can be diminished.

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    3. Ensure that your plan is practical and manageable over Time

    Once you have established a plan that is agreeable with the governing tax authorities, the next step is to ensure that this is manageable over time. Execution is critical, as even the most detailed and proactive plan of repayment is meaningless unless it can be sustained. So even if you have managed to negotiate an amicable installment plan to settle your tax debt, for example, you must carefully analyze your income and existing repayments to ensure that this is viable. The same principle applies if you commit to making estimated quarterly repayments, while anyone who requests an extension must guarantee that they can meet the full cost of their debt and any affiliated interest within the specified time frame.

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    4. Seek help from a tax debt professional before executing your plan.

    When dealing with a governing tax body such as the IRS or HMRC, it is absolutely imperative that you deal in precise fact and meet deadlines without fail. Even though authorities such as the IRS remain flexible and are willing to allow payment extensions of up-to 120 days, for example, the failure to repay within this time frame will be met with a far more serious response. Given the need to comply with tax legislation and ensure that you make repayments according to exact terms of your agreement, it may be worth seeking advice from a tax debt professional before your finalize and execute your plan. While this may require an initial investment, it will potentially help you to reduce the cost of your repayments and make longer-term tax savings.

    5. Learn from previous mistakes and change your behavior for the future.

    On this note, it is also important that you look to learn from your mistakes and ensure that you do not incur future tax liability. Acquiring knowledge is key, so you should also look to review individual income streams and how your earnings are structured in relation to tax. If you are someone who looks to boost your income though financial trading and speculation, for example, you may want to consider considering investing in derivatives that are free from capital gains tax. In the UK and similar European countries, any earnings generated through activities such as currency trading are ineligible for taxation, as these practices are categorized as informed gambling. So long as this is not your sole or primary source of income and you are able to access a real-time price chart while trading, it is therefore possible to maximize your earnings without falling foul of tax legislation.

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    Last Updated on July 20, 2021

    Financial Freedom is Not a Fantasy: 9 Secrets to Get You There

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    Financial Freedom is Not a Fantasy: 9 Secrets to Get You There

    Have you ever considered your life now, and how it would be if you had more time to spend with your family and less worries about money?

    Nowadays, financial stress is one of the most troublesome weights in life. If you’ve ever encountered financial stress, you know the difficulty of not having enough income to pay your obligations or bills.

    Many people say that money is not the ultimate goal of life. While that’s true, money certainly plays a very significant role. The meaning of financial freedom changes with the different phases of our life, but ultimately, it is something that many people strive for.

    In this article, we’ll explain how to capture that financial freedom you’ve been looking for. Read on to learn the secrets to financial freedom.

    Break Free of Your Finances

    Financial freedom is about having a constant flow of cash from your assets to cover all your regular needs.

    When you are not worried about your income, or living paycheck to paycheck, you gain a great sense of freedom. It’s the freedom to be obtain and do what you truly need to make your way through everyday life.

    Gaining financial freedom, though, is a process of growth, making small improvements and gaining emotional strength.

    Though it seems hard to believe, it is really very simple to get financial freedom.

    To do so, you simply need to make sure that your assets exceed your liabilities. In other words, you’ll need to find the sweet-spot where your residuals meet or surpass your expenses. This is something that you can achieve with the proper plan.

    While not every person will accomplish financial freedom, the potential for anyone to do so is certainly there. Anyone can achieve this success, regardless of their income level.

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    Outlined below are 9 secrets that will help you in your goals of achieving financial freedom.

    1. Stop Unnecessary Spending

    We often spend money inwardly, instead of objectively.

    For example, you may spend when you’re anxious, depressed, restless, exhausted, from fear of missing out, or to please others. This is a very unhealthy way to handle your finances.

    To stop this habitual spending, log down all your spending over the course of a month.

    Just as some people keep a food diary, keep an expense diary. Remember not to just write down how much and what you spent the money on, also include the circumstances of why you spent the money. Was it an impulse buy at the checkout line or was it something you planned to purchase?

    This increased self-awareness could enable you to avoid triggering situations in the future when you are considering an impulse buy.

    2. Plan a Monthly Budget

    This is a great opportunity to get serious.

    Take a seat with your spouse or partner and make a monthly budget based on your income, not your expenses. You are never again going to spend more cash then you have on hand.

    Overspending is the thing that led you to more financial obligations. Make sure you decide every month what is coming in and what will be going out and stick to that budget… no matter what.

    3. Cut-up Credit Cards

    Perhaps you are the type of person who always pays your credit card balance in full before the end of your billing cycle, and enjoys the reward points you gain. If this is the case, then you’re already way ahead of the game.

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    If not, you may want to consider ridding your life of the burden that credit cards bring.

    Many cards have strategies set up so that if you make a certain number of late payments, they will raise your interest rate much higher. This can really add up in the long run and you won’t be doing your financial situation any favors. If you’re prone to late payments or have a large balance due on your cards, cut them up!

    Without proper self control on credit card spending and payments, you are basically throwing your money away. To ensure that you have better control over your spending, use only cash or debit for all future purchases (and don’t forget to pay at least your minimum payment on your cut-up cards each month!).

    4. Increase Savings

    There is no doubt that for a comfortable retirement you must accumulate satisfactory savings throughout your working life.

    It’s good practice to save up to 15% of your income.

    Start with your workplace 401(k), if you have one. If not, a Roth IRA (if you are eligible) or a traditional IRA (if you are not eligible for the Roth) are the next logical steps.

    Increase in longevity means you might be able to look forward to 25 to 30 years in retirement, or possibly even significantly more. Investing now in good retirement plans will ensure that you have a guaranteed a stable monthly income when the time comes to stop working. [1]

    5. Invest Wisely

    Consider investing in funds.

    Specifically, you will gain higher returns if you invest in different types of mutual funds such as Debt funds, Equity funds and Hybrid funds with a proper balance, although it absolutely relies on your personal preferences and sense of risk taking.

    To get the most of these benefits, make sure you are investing in a variety of assets. Another resource of investing in mutual funds is SIP (Systematic Investment Plan) where you invest some money every month in funds. SIP works by averaging the per unit price of the stock.

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    Mutual fund investors are aware of the benefits of an SIP (Systematic Investment Plan). For one, it is the most secure way to invest in equity mutual plans so that wealth is created over a long period of time. This plan also helps you to gain a better sense of financial discipline, which will come in handy in all your financial endeavors.

    6. Invest in Gold

    There isn’t really a better way to invest in gold than to have the physical gold itself in your possession.

    You can purchase gold coins and bars from mints as well as from coin dealers and other private sellers.

    Another way to invest in gold is through ETFs (Exchange Traded Funds).

    These are is similar to mutual funds but they are exclusively investments of gold. ETFs are great because they offer more liquidity; the ETF owns the actual physical gold, stores it, and retains the value of the shares. These shares can then be bought and sold in the stock market, and one big benefit is that the transaction costs of gold ETFs are much lower than the that of physical gold.

    With its consistently-increasing demand, investment in gold can be very wise long-term investment to make.

    7. Stash Emergency Funds

    Whether it’s a cash gift or a work bonus, always try to save any extra money that comes your way rather than making unneeded purchases.

    If you get paid every other week, you’ll get an “extra” paycheck (three rather than the usual two) twice a year. Either save those paychecks towards your emergency funds or utilize the money to pay down other obligations, such as loans, credit cards or other debts.

    Make it hard to get your cash.

    Put your savings in an alternate bank, maybe an online bank that forces you to delay for several business days before transferred money hits your regular bank account.

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    8. Find Fabulous Mentors

    Find a mentor, such as a friend or family member, who has exceptional control over their finances and pay attention to everything they do.

    If you do not have any friends or family that are enjoying financial freedom, then find a mentor online! There are numerous blogs and guru websites featuring the advice of many people who have reached financial freedom, and they exist primarily to let you in on how to achieve it for yourself.

    There are also plentiful forums available that share tips and tricks on how to best achieve financial freedom. Read as much as you can and start changing your habits for the better.

    9. Be Extra Patient

    Patience is the key of financial success.

    Being patient can be quite tough, especially when you’re struggling with your finances, but having faith is worth it. You’ll continuously be on the right track if you are taking the proper steps above.

    So don’t be discouraged, even if you are only saving a few dollars a month; it all adds up. Within just a few years you’ll look back proudly at your accomplishments and be glad that you had the patience to get there.

    Financial Freedom for All

    Anyone can achieve financial freedom, regardless of their financial circumstance.

    Use the tips provided above to get yourself on the track to financial freedom and toss your monetary concerns out the window. If you wish to achieve a life with financial freedom for yourself and your family then you must adopt a disciplined approach towards your finances.

    Following the simple secrets above is a great start to making your money work for you, so you can work less and live more!

    Featured photo credit: rawpixel via unsplash.com

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    Reference

    [1] Hartford Gold Group: IRA Retirement Accounts

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