Do you have debt on your mind?

Now that the tax season is in full swing, we’re hearing a lot of different statements from clients.

Things like how their tax refunds are going to be used to pay down credit card bills or other debts.

I’ve heard that for years and, honestly, I think that was the biggest “negative” for taxpayers last year when the new tax bill went into effect…

In many cases, they did not owe as much, but the return they had come to expect was smaller or nonexistent, so it felt like they paid more.

So if you’re one of the millions of taxpayers who try to use their refund to help sort out debt, I want to share another way you can work through that challenge.

The Debt Strategy

Now, I can’t claim this is my own idea – I heard about it years ago watching an interview with Dave Ramsey.  He calls it his “snowball” strategy and it basically works like this:

(And bear in mind, there is a far larger-reaching strategy at play here for those of you who really want to pursue Mr. Ramsey’s strategies)

To start with, you’ll list ALL of your debts, from smallest to largest.  This might be as easy as one or two credit cards, then the car notes, then the mortgage.  Just get it on paper.

Next, with respect to all of those debts, you’ll make the minimum payment on all of them EXCEPT for the smallest.  This one, you’ll pay down as much as you can that month.

Wash, rinse, and repeat.  Month after month, until the smallest debt is paid off, then move on to the next smallest.

Essentially, the idea is that by concentrating on one challenge, you’ll take care of it faster, and this will give you momentum (and extra money) to pay off the next smallest one.

Kinda like how a snowball grows larger and larger as it rolls down the hill.

Take Back Control

Last year was a very challenging one for many taxpayers, as they “lost – at least on paper – a financial windfall many had come to rely on every year.

The good news is there are still a lot of ways to save money and limit debt.

Is tax debt a major issue for you? Schedule a free, tax resolution consultation with us to explore your resolution options.

Blackhawk Tax Solutions, LLC

(719) 694-5505