Tax debt can quickly get out of hand if you put off dealing with it. If you fail to pay on time, the IRS will tack on penalties and interest to your outstanding balance. The monthly interest is equal to the federal short-term rate plus 3%.1The monthly penalty for not paying on time...
Now let’s dive into two common types of debt: student loans and credit card debt. How to pay off student loans Overall, the average student loan borrower owes almost $30,000.1 If you’re struggling to pay off your loans, consider the following options: Government repayment plans: If...
Balance transfer credit cardsallow you to move high-interest debt to a card with a lower or zero-percent introductory interest rate. This may provide temporary relief and help you pay down debt faster. However, it’s crucial to pay off the balance before the promotional period ends to avoid ...
Pay Less on Retirement Withdrawals More Getty Images One effective strategy many retirees overlook is converting previously funded tax-deferred funds to a Roth IRA or Roth 401(k). Key Takeaways Avoid early withdrawals from retirement accounts, such as IRAs and 401(k)s, which incur tax...
It’s great to pay down your debt early, but it shouldn’t affect other priorities like saving for emergencies, paying off high-interest debt, or even home improvement projects. Evaluate your budget, see if there’s room to pay more toward your mortgage, and then make a plan that fits ...
Use any extra moneyto double up on payments toward a debt. This will help you pay the principal loan amount faster, so you will pay less interest in the long run. Use your tax refund, money earned from working overtime, birthday money, or any other unexpected money to pay more than th...
that you still have protections, and there are many ways to pay off a debt in collections. Depending on how much debt you have and the types of debt, some options may work better than others. Here are some things to keep in mind if you’re wondering how to pay off debt in ...
How interest affects payments: As you work to pay off your debt, interest charges consume a portion of your payments. The longer the debt remains unpaid, the more interest accumulates, thereby increasing the total cost of the debt. The unique case of tax debt Tax debt is different: Tax de...
Here are some payment options to consider: Pay with an installment agreement payment plan One option is to pay your tax debt with a payment plan. There are a few different options for an installment agreement (also referred to as a payment plan). For example, suppose you qualify for a ...
Eliminate the highest-interest-rate debt first. Pay as much as you can over the minimum payment on your highest-rate debt, paying minimum payments on all other debts. When you pay off the highest interest debt, move on to your next-highest-rate debt. Save tax-deductible debt, such as st...