Last week we looked at wiping the money slate clean, which takes time and will probably always be a bit of a work in progress. I only say that because I never want anyone to think it’s a one time thing and then away you go. It’s like tuning a piano, once it’s in tune it takes ongoing attention to keep it that way. It doesn’t need to be involved, just consistent.
Let’s talk about cleaning up yesterday, in case that applies to your situation. Sometimes we have old debts that require some attention to either pay off or charge off. Sometimes it’s old tax returns or tax payments. Maybe it’s cleaning up your credit. Whatever it is for you let’s look at clean up steps you might want to take.
If you have any old debts you can walk through this quick process to triage and handle them:
- Identify all old debts, sometimes they show up on a credit report, other times they are money owed to family, friends, etc.
- Separate them into money owed to people vs. institutions like banks or credit card companies
- Clearly note any debts that have emotional baggage attached to them
- Make restitution based on the circumstance, this is pretty subjective, if you borrowed $1,000 from a friend ten years ago and your friendship survived have an honest conversation about the repayment. What amount will make the situation right for both of you?
- If it is money owed to an institution check out the section below on credit clean up
Been a while since you filed a tax return, been there 🙁 I was once 3 years behind, it sucked. Depending on your level of accounting knowledge you might just want to take everything to an accounting and have them handle it. If possible I always suggest doing your taxes yourself so you know where every dollar goes but sometimes an accountant can find deductions that you might be unaware of. Once you have the results you have a few options:
- If you owe a little, submit payment or a payment proposal to the IRS, CRA, etc. if you do this before they tart garnishing your wages they might wave the fines, fees and penalties.
- If you owe a lot, it might be worth a trip to a tax lawyer, sometimes they can make a good chunk of it go away or at least get it down to a manageable amount for you.
- If you are getting a refund… cool!
Cleaning Up Your Credit
People often look at this as step 1, I find that it is best to do this after you have gotten your bearings by clearing old debts + deal with back tax returns since this will usually take the most time.
Coincidentally, just this very morning, I had an ad show up in my Facebook news feed that promised to do this very thing… fix your credit is 30 days so you can…scream!!… get access to the credit you need to live the life you deserve. Wanna get me riled up? There is no better way than to lure people who have already been taken advantage of by creditors into spending more money to fix the credit score that was ruined by them in the first place.
Check back next week for info on how to assess these types of services, not all of them are bad, and find out if they are the right fit for you.