For those of my readers familiar with my financial situation, you know that The Lady in the Black’s has an evil personal finance nemesis. In the end, she concludes it’s not always about the victory…or the defeat. Everyday financial battles are waged everyday, somewhere in between win and lose.
Personal finance nemesis? (Yes, I’m excited for the premier of Marvel’s Infinity War. Sue me.) For those thinking “I don’t have a personal finance nemesis,” this article might not be for you. This article is for those of us that fought many battles with a specific yet dark financial figure or maybe they fight many. When you struggle with money, it’s a mentally, emotionally, and physically draining experience. It’s a fight and probably, if you are like me, an ongoing on.
The evil often starts lurking when you are young, and perhaps innocently enough, you get caught up in bad habits or difficult situations. It might be impulse buying, intolerance for budgeting, or an inability to save money. It might be situational like a divorce or a debilitating health condition. You might battle unemployment or underemployment. Or perhaps it’s just as simple as not ever learning about money management….or any myriad of issues that cause financial stress.
The Lady’s Personal Finance Nemesis
The Lady in the Black hasn’t posted in a while. And maybe, just maybe, I know why. Because she knew this day would come; April 17, 2018 Tax Day AKA The Big Battle. But before we get too far ahead let’s give the financial voyeurs out there a little upfront peek-a-boo.
Current balance due (prior to today) was in the neighborhood of $30,000. That’s a lot, you say. To that, I laughed heartily and with my best Dolly Parton impersonation say “Oh, bless your heart, sweet child. That’s nothing.” I’m actually proud of all the steps I’ve taken to reduce my tax debt. This amount represents 2 separate years of past due Federal tax balances. I currently have an installment plan in place for $500/month.
CA Franchise Tax Board
Just a couple of months ago, the lien these villains had on my credit report was cleared. That means that for a brief yet glorious moment in time The Lady was not indebted to these incredibly gruesome devils. (You might pick up that I don’t respect this particular agency. However, through amended returns and $200 monthly payments I cleared off a $6,500 debt.)
The Agent of Evil
We could argue that tax obligations are good or evil. I’m not down with politics but will reveal that I don’t necessary oppose the concept of taxes. I do however feel that instrument of my personal devil is estimated taxes.
I know. I know. They seem so harmless. Estimate your tax bill and divide by 4. Send in payments by the due dates. Easy-peasy. Right?
WRONG! WRONG! WRONG! At least not for me.
As a freelancer living in one of the nation’s most expensive regions with a notorious bad history managing her taxes and/or personal finances, it’s hard to set aside the appropriate amount for estimated taxes. Then add into the mix that I share custody of my child and only claim her (and her expenses) every other year. Oh, and my income is far from “predictable.” And if that isn’t enough, try out that fact that my budgeting system often doesn’t have enough wiggle room and I’ve been forced to use those estimated tax savings to cover those “crises of cash flow.”
Last July, when I determined to launch my most recent battle with taxes, I was determined to take a few deep cuts at that bad boy.
And you know what, I did….kinda.
The Battle Plan
Back in July 2017, I promised that I’d try to pay estimated taxes, even though I knew I was starting late in the year. It was a losing battle for sure BUT I thought I might be able to mediate the financial damage inflicted on me come The Big Fight.
And you know what, I did….kinda.
I managed to make 2 out of 4 (or 50% for those math nerds out there) of my estimated taxes for 2017. Perfect? No. Still incur late fees and penalties? Yup. (Those little goblins are relentless.) While you’ll see in a bit, this represents a drop in the bucket…but I’m still proud as shit at myself. I made a commitment, a plan, and I tried really hard.
If you are fighting your own personal finance nemesis, I strongly suggest gearing up and getting tactical. Battle wins don’t just happen. They are planned.
The Big Fight
Leading up to The Big Fight (otherwise known as filing taxes), it should be disclosed that The Lady fired her previous knight in shining armor. I had used Block Advisors for previous years work but became dissatisfied and distrustful. I decided that part of my battle (perhaps foolishly) was to file for myself. (Ok, ok. An ethereal wizard named TurboTax helped tremendously.)
The Lady girded herself with requisite forms and color-coded file folders. Rainbow paper clips and Post-It notes were a trigger-fingered breadth away.
1099s? Bring it. 1099-SA? Whatevs. Home office deduction? Been there, fought that. Forfeiture of debt? Ok. Ouch. Dividend earnings? Oh, those are new. HSA contributions vs disbursement? Ummm… well. Filing single/no dependent? Ya. Ok. That one hurt.
Truth is, The Lady arrived at the tax bill she was kinda expecting for her earnings and change in filing status.
Total damage? An additional $24,000 for Feds and $6,400 for State. Nice hit, Uncle Sam and CA Bad Dudes. The Lady is down but she’s not out.
Finding My Feet and Dusting Off
Before I continue, I’ll have to pat myself on the back for a moment.
For a person with my history and current financial situation, I could probably just stay down once receiving a hit like that. Wallow in my continued defeat against my personal finance nemesis. I could close my eyes against the sound of his cackling and maniacal victory laugh. But no. Not this Lady, mister. You got the wrong gal.
To my credit, I’ve remained remarkably cool and collected during the last few weeks. Did I procrastinate until the very day before the filing deadline to file? Yes, yes I did. (Let’s not dwell on that, shall we?)
The good news is that I fought the good fight.
I promised myself as part of my New Year’s Goals that I would “file and pay taxes on time.” Yesterday, I electronically filed my Federal and State taxes ON TIME (one day early in fact.) Today, I waited in a long line at the post office to mail my two payments in ON TIME. OK. Fine. I sent them each only a token payment. I could not pay the entire bill but still I’m happy about this small victory.
And quite honestly, that win is not really too small. I sent them each $2,000. That’s $4,000! I don’t know about you but that’s a lot of money to me! It leaves me still owing and returning again to humbly request installment plans but it’s better than nothing and I’m quite proud of how I got it.
I sacrificed my emergency fund and about half of my investment portfolio. Before everyone gets up on me for doing that, remember that everyone’s fight is different and what makes financial sense to one may be different for the other. The $4,000 I pulled out of my ass today represents a good-faith gesture on my part to continue my battle.
It also was an internal acknowledgement that I know I’ve been a bit pre-mature about my investing strategy. Well, more accurately, I’ve been a bit pre-mature about my lack of investing strategy. I’m the first to admit that it’s a strength to admit when you don’t know something. I don’t know investing. I don’t. But I’m teaching myself. And I’ve learned a lot in the last 11 months. I’m OK with dumping some of my one-off positions. I need to focus on getting this tax debt under control. It’s once again my priority.
Looking Toward the Sunset
In summary, The Lady in the Black just added a huge chunk of debt at her own feet. But she’s made some serious inroads in winning one year’s battle (the war is relentless) and she knows her opponent much better. She’s getting better, stronger and if she acquires bionic hearing that would be awesome. However, in the absence of bionic powers, she’ll just keep doing what she’s doing and working her steps toward a profitable life.
Yes, and I’ll establish new installment agreements. (I even know where to pull from my budget to increase my monthly payments.)
For those fighting similar battles, I encourage you enter the fight with your chin up. You might be your own worse personal finance nemesis but that is no reason not to treat your opponent with respect. Plus, there’s nothing uglier than a girl boss fighting herself.
Save your aggression for a more worthy foe like…..I don’t know, people who leave their blinkers on.