Get Taxes Out of the Way

The Washington Post Sunday - - Personal Finance - Car­lesa A. Wash­ing­ton

Age: 24 Back­ground: Wash­ing­ton is sin­gle with no chil­dren. She is a re­cent grad­u­ate of Howard Univer­sity and works as a concierge, as­sist­ing new apart­ment res­i­dents with set­tling in. She lives in the Dis­trict with her mother. Wash­ing­ton earns about $ 32,500 a year.

New Year’s res­o­lu­tion: Pay off her debts and be­gin sav­ing to buy a home.

Progress so far: With some tight­en­ing of her spend­ing, she’s paid off $ 1,247 owed to Bally’s and $ 318.24 to Macy’s. So far, she’s saved about $ 300 in her emer­gency fund and $ 120 in her home­own­er­ship fund. She dis­cov­ered that a delin­quent Visa bill had bal­looned to $ 6,000 with in­ter­est and fees. She called and got the com­pany to stop charg­ing in­ter­est and fees. She’s been putting about $ 600 a month to­ward that debt, which is down to about $ 4,800.

“ I just can’t wait to be debt- free,” she said.

Her chal­lenge: Wash­ing­ton re­cently learned she owes the IRS about $ 1,400. A for­mer em­ployer did not with­hold enough taxes from her pay as she had in­di­cated when she filled out her W- 4 form. She’s get­ting re­funds from Mary­land ($ 498) and Vir­ginia ($ 178). That means she has to come up with about $ 700.

The next step: I sug­gested she cut back on the ex­tra pay­ments on the Visa bill to save the money for the tax bill. She may need to make pay­ment ar­range­ments with the IRS.

She’s still work­ing on her bud­get and spent an un­planned $ 495 to be trained as a bar­tender. At least that train­ing can help her pick up some ex­tra in­come.

Wash­ing­ton won­dered about tak­ing a sum­mer vacation with friends, but she had the right an­swer. Not un­til her debts are paid, she re­as­sured me.

BY NIKKI KAHN — THE WASH­ING­TON POST

Car­lesa A. Wash­ing­ton owes the IRS about $1,400. Cut­ting back on ex­tra Visa pay­ments could help her pay the tax.

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