2018 New Year's Resolution planning notes
Posted by: Howard Dvorkin, CPA
Date of post: January 8, 2018

Don't make promises you can't keep. Make money instead.

There’s an old adage that rich people don’t work for their money. Their money works for them.

What about those who struggle with debt? Well, if I’ve learned anything in two decades as a financial counselor, it’s this: Getting out of debt is much like getting rich. The best way to be successful is to let others do the work for you.

That’s why, if you’re making a New Year’s resolution about money this year, I recommend the following…

I resolve to repair my credit

It’s bad enough being in debt. It’s worse when there are mistakes on your credit reports that make it look worse than it really is.

Believe it or not, one out of every four credit reports from the Big Three credit bureaus — Equifax, Experian, and TransUnion — contain a mistake that could drag down someone’s credit score. One in 20 have an error so big, it could lower your credit score by 25 points.

That’s not my opinion. That’s the conclusion of a report by Experian, one of those credit bureaus.

Who’s going to help you: Believe it or not, those credit bureaus, with a little persuasion from the federal government. The Fair Credit Reporting Act requires each of those bureaus to give you one free credit report per year. You can review those reports and dispute mistakes. Learn how in Debt.com’s report, The Truth about Free Credit Repair.

Who else can help you: You can also consult an expert, who will do all the work for you. It’s akin to having a CPA do your taxes. Sometimes, a pro is worth it. to learn more, check out How Much Does Credit Repair Cost?

I resolve to get out of credit card debt

If you have more than $5,000 in credit card balances you just can’t seem to pay off, you’re not alone. The very structure of credit cards makes it akin to quicksand: The deeper you get, the stronger the pull. That’s because the steep interest rates cost you more and more, while penalties and fees make it difficult to recover.

Who’s going to help you: It sounds too good to be true, but this country has several well-regarded nonprofit credit counseling agencies. You can call any one of them for a free debt analysis from a certified credit counselor. (Debt.com can introduce you to the best ones by calling the number at the top of this page.)

Who else can help you: The results of your debt analysis might point you to a debt management program, which will cost you a few bucks but save you many more — because it works with your creditors to reduce your monthly payments by up to 30 to 50 percent.

I resolve to get out of student loan debt

There’s more student loan debt in this country — almost $1.5 trillion — than all the credit card debt combined and it’s growing fast. That means this country is paying off its student loans more slowly than ever, and it’s preventing young people from buying homes.

Who’s going to help you: It’s gotten so bad, the federal government has stepped in. It offers a slew of programs you can do yourself, all designed to lower your monthly payments. It can get somewhat complicated, so check out our report, Do-It-Yourself Student Loan Consolidation. After all, this is same government that created the IRS and the tax forms we fill out each year.

Who else can help you: Because these government programs can be hard to understand, with similar-sounding names like “income-based repayment program” and “income-contingent repayment program,” consultants have popped up to help you choose the best fit for you, then handle all the paperwork. Again, you’ll pay a fee, but it will be eclipsed by the amount you save. Debt.com can introduce you to the best consultant for your needs.

I resolve to get out of tax debt

One of the most complex problems I deal with is working with Americans facing tax problems. That’s because tax debt has some of the most complex interest rates, penalties, and fees of any other debt you incur. if you think paying your taxes is complicated, see what happens when you don’t pay them.

Who’s going to help you: The IRS will never be called “compassionate,” but the agency really does want to help you. It offers several ways to pay off your tax debt, but once again, they’re not easy to grasp, whether it’s an installment agreement or an offer in compromise. Still, if you can navigate these offers, you can save big.

Who else can help you: Because it’s the IRS, and because tax debt can lead to so many bad things if you don’t take care of it, I usually recommend against the DIY approach in this instance. Consult a tax professional, preferably one specializing in tax debt. Of course, finding a respectable firm is tough, so that’s why Debt.com will do that for you. We’ve work with such firms for years, and we know which ones are ethical. In fact, we don’t refer people unless those firms sign our Code of Ethics.