September 12, 2025 • 24 mins
This week’s listener, “Beth,” is stuck between tax debt and credit card debt—plus the anxiety that comes when you’re a little bit of a rebel, chasing that nonprofit art life immigrant parents never signed off on. (We see you, Beth!) Mandi shares lessons from her own contractor journey, breaks down why the IRS is no joke, and gets honest about how hard it is to face down those phone calls and official forms.
You’ll hear:
• Why tax debt takes priority (because the IRS does NOT play, y’all)
• Smart ways to negotiate payment plans (and what “offer in compromise” means)
• Real talk on avoiding credit card traps, balance transfers, and why budgeting apps like Rocket Money and Monarch can help you see the whole mess clearly
• Which debt payoff method actually works for real people (snowball vs. avalanche, plus why momentum matters)
• How to keep your sanity and your community close—because shame and overwhelm are not welcome on this show
• Lifting each other up and why it’s ok to slow down, set boundaries, and put self-care first (even free self-care counts!)If you’ve felt stuck, overwhelmed, or just wish you weren’t facing those numbers alone, this is the episode for you. Write in, DM, or leave us a voice memo with your story—we’ll show up, judgment free.
RSVP FOR MY FREE WEBINAR 9/25: How to Use AI To Master Your Money + Career In a Challenging Economy
RESOURCES MENTIONED:
https://www.irs.gov/help/let-us-help-you
IRS PHONE DETAILS:
Individuals
800-829-1040
7 a.m. to 7 p.m. local time
Businesses
800-829-4933
7 a.m. to 7 p.m. local time
See omnystudio.com/listener for privacy information.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:05):
Hey, hey, vaham, it's time. Wait, I sound a little pathetic.
I just realized, y'all, I'm not feeling too well. It's
been back to school and one of my two little
boys has brought back a bug already. And I don't
know what it is that I got. Maybe it's just
a case of the mid twenty twenty five blues or flu.
(00:27):
I don't know, but not feeling my best. So for
anyone who's listening, who, oh Lord, have mercy, there's a
cricket on my microphone. Okay, well, at least I was
able to just liberate a cricket from my studio. Oh
my gosh, in my like, is that? Do I have
like seven years of good luck Netmark? Little tiny green
(00:48):
crickets supposed to be good luck? Or was that just
from mulan And I don't know, but yeah, I'm not
feeling my greatest. That being said, I'm excited to be
here and I'm really excited to listen into today's question.
We actually had a listener who took the time to
send a voice note to me on IG and I
just thought it was really sweet. So I'm actually going
(01:09):
to play the question for y'all. Meant to this listener
who shall remain anonymous. But before I do, I just
want to say that all of the mixed feelings that
y'all are feeling in the wake of the assassination on
Charlie Kirk's life this week, I am feeling the exact
same things. I feel like Michelle Obama not going to
(01:29):
the inauguration at the beginning of the year. And I
know that y'all know exactly what it means if someone
sends you a picture of Michelle Obama in response to
an RSVP for an event. I'm just gonna issue my
Michelle Obama jpeg file. Just download, upload that to the Internet,
(01:50):
and you know, there we go. I have uploaded that file.
I also want to bring this spotlight back to us. Okay,
I am hosting in a couple of weeks here September
twenty five, at eight pm, I'm doing a webinar that's
totally free. I'm going to be sitting down with y'all
anyone who wants to join, and we're going to work
through together some of the most popular AI tools that
(02:12):
are available. But I'm going to show you how to
use those AI tools to get on top of your
finances and also to do what you can to beef
up your career prospects during a really challenging job market.
So I'm going beyond just how do I judge up
my resume chat GPT or how can I make my
resume fit for this job. I'm going beyond that, and
(02:33):
I'm hoping that I'll see some of y'all there. So
if you want to join, registration is still open. You
can go to the show notes of the podcast now
and register. It is. It's going to be a good time.
It's going to be a supermatenty fith eight pm, and
I hope to see y'all there. All right, let's get
into today's question. It is a juice you want. This
(02:54):
question comes from a listener who is challenged by a
couple of different types of debt, including some tax Let's
get into a bafan.
Speaker 2 (03:01):
Hi, Mandy, I just started listening to your podcast in
this past year as I've for the first time in
my thirty four years of life, had started to look
at my finances and decided to stop being afraid of them.
And I listened to your eleven thousand dollars credit card
debt episode. I also have about eleven thousand dollars of
(03:23):
debt and credit card in credit cards. However, I also
have probably about four thousand or five thousand in debt
from the years when I worked as a contractor with
the Smithsonian and a freelancer pursuing that you know, nonprofit
art life that our immigrant parents did not want for us.
(03:47):
And I don't know how to tackle this debt, and
I feel really stuck. I think I should probably do
my tax debt first, but that seems intimidating, and you know,
I'm trying to figure out how to do it all
to be realistic, and I get in that cycle of
I'm not doing enough, so why do anything at all? So,
(04:10):
you know, working through that with my therapist, but I
just wanted to know if you have very tangible strategies
for dealing with it and ways to cope with the
stress from it. And yeah, I'm ready.
Speaker 1 (04:28):
All right, I'm gonna call you, Beth. I'm gonna keep
you anonymous, but Beth, thank you so much for your question.
I chuckled a little bit at the fact that, you know,
the trying to live that nonprofit art life that our
immigrant parents did not want for us. So you're a
little rebel. Huh, you try to work the Smithsonian. It's
not the kind of thing where you know you. I
(04:51):
don't want you to feel like your parents. My parents
were right, I should have never gotten into this space.
But it does sound to me like you did that
on a contract basis, and like so many you know,
first time contractors, consultants, anyone who's working on a ten
ninety nine, it's really challenging to then be completely responsible
(05:13):
for setting aside money for taxes. Same boat club over here. Okay,
I don't think anyone who's listening who on their very
first you know, contract gig where they earned. I think
you have to think it's something like if you get
more than six hundred dollars on a ten ninety nine,
then you owe taxes on it, you know, obviously depending
on the income source. But yeah, it's completely understandable. It's
(05:37):
this whole tax system is so jacked up. It is
so set up for the super rich to get off
scot free and for the everyday you know, solopreneurs, small
business owners, you know, individual taxpayers to really struggle and
to feel like you're constantly in like some sort of
(05:58):
like researchers game, like mouth trap or pac Man or something.
So I get it, and my mandy money makers know
very well that I have a lot of anxiety when
it comes to taxes myself. I can't think I haven't
particularly ended up in a ton of tax debt. Where
(06:18):
I have ended up struggling is like I make goals
to pay myself first, like contribute to my four one K,
my solo for one K, or my step ira and all.
My accountant will sort of make her plan for my
taxes based on the amount that I said I was
going to contribute to those retirement accounts, and then I
(06:40):
just won't end up doing it. And then she's like, girl,
you owe yourself. I think one year, I owe myself
eighteen thousand dollars. I said, I don't know if I
can come up with this eighteen k. I said, I
was going to contribute, but it was an issue, right
because she had sort of been putting together her my
tax liability plan and you know, trying to get me
to oh the least amount possible and by not contributing
(07:03):
that eighteen thousand, which in a sense meant I wasn't
reducing my taxable income by eighteen thousand. I wasn't sheltering
that money from taxes. I was kind of jacking up
her plan. I was making it harder for her to
do her job. I did end up finding the eighteen K,
and I'm so glad I did. But yeah, taxes as
(07:25):
a an entrepreneur, solopreneur, you know, even just someone who
has a side hustle, it's difficult. It sure is. But
you don't need me to tell you that. You're already
living in the challenge. You have that four to five
thousand dollars in debt from those years that you worked
as a contractor. You also have about eleven thousand dollars
(07:47):
of credit card debt and different credit cards. So what
is it about that number eleven thousand. I know you
said you listened to that episode. I did from another
listener who had about eleven thousand dollars of debt. So
all I can say is, y'all ate alone. Y'all already
know that. But when you're looking at these different types
of debt and wondering which one to tackle first, I
(08:09):
think taxes have to come first in this case. Oh wait,
I didn't do my spiel. I am not your financial advisor.
I'm not your investment advisor. I'm not a professional you
certified in any of those things. So I'm just a
girl with some advice and some knowledge based on my
experience and obviously decades of work in business and finance journalism.
(08:33):
But what I will say is the IRS don't play.
The IRS has many ways to recoup a debt in
many different in different and more potentially damaging to your
life ways than just a credit card would. So the
thing about the IRS is they can put a lean
on your property. So if you own property like a
(08:56):
home that's most typical, Typically what happens the IRS can say, oh,
you don't actually own this, we do now for four
to five thousand dollars of debt. That's not enough for
them to like take over ownership of your house, but
it can be something that goes. You know, they can
put a lien on it, and then if you were
(09:17):
to ever sell, like they would make sure they get
their cut. They can also potentially garnish your wages in
the future if the debt gets delinquent for too long
and then they sue you, And that is a possibility.
If you're not making payments on a tax debt, it
is likely that you could end up being sued and
then taken to court, and unless you're able to mount
(09:40):
a strong case for why you're unable to pay that debt,
the judge may rule. And a lot of people don't
even show up to fight those types of complaints, you know,
when it comes to tax debts, and so they end
up the judge will automatically rule in favor of the creditor,
whether it's a credit card company, the lender, or in
(10:01):
this case, the IRS, and say, okay, we're going to
garnish any w two wages you earn. We're going to
garnish for a certain amount. I believe it's up to
fifteen percent. And even like Social Security income can be
garnished and you may face other penalties, late penalties, things
like that. So it can be riskier to leave tax
(10:21):
debt unpaid. And I would say, when it comes to
tax debt, I need you to be on the phone.
And this is really hard to do, right because the
IRS has never been I don't know if it has
been as under resourced as it is now. Maybe there's
other times in history, but they've had mass layoffs. They
got doged, and even before they were doged, they were
(10:42):
struggling with understaffing and old systems and all that. But anyway,
you want to try to get on the phone with
the IRS and ask to be put on a payment plan. Also,
make sure that you are actually filing your tax returns
each year, so even if you haven't been able to
pay your taxes, you still have to file your tax returns.
(11:02):
If you are really overwhelmed by the debt and you
don't have any additional funds to pay toward it, you
can ask them to do something called an offer in compromise,
which basically is the equivalent of settling a debt for
less than ode. The IRS does have an office called
the Taxpayer Advocate Service, so you could reach out to them.
I'll put a link in the show notes where you
(11:24):
can find more information. Taxpayer Advocate Service is really put
in place to protect us, the taxpayer, from predatory practices
from the whole IRS process in general, So if you
ever have a complaint about an experience you had, you
can reach out to them. But also they may have
some resources for just everyday taxpayers who are struggling to
(11:46):
pay back their debt, and it can at least offer
you some guidance I think the scariest thing about this
advice that I'm giving is probably like getting on the
phone with the IRS? Where do you even like, what
even is the phone number to get on the phone
with the IRS. I'm like this. I think heading to
IRS dot gov as your first stop is a good
first step. Again, because they are so understaffed. I think
(12:07):
there's a lot of someone was doing their job. They
create a lot of documents, a lot of PDFs through
the IRS dot gov that have a lot of like
evergreen information. They have a lot of evergreen content, So
at least somebody was doing their job, got us, you know,
set up for success in spite of all these firings
and layoffs that have been happening. So I'm gonna put
(12:28):
a link in the show notes to like your first
you know, starting place at IRS dot gov. It's the
help page. So if you scroll down to Payments and Penalties,
they have some links here to different payment options, payment
plan or installment agreement requests. You can view your balance
and payment activity, and again it has a link to
that offer and compromise option that I talked about. There's
(12:50):
additional links on understanding if you'd get a federal tax lean.
Like I mentioned earlier, there's the Office of Appeals. There's
also for the future if you do take on additional work,
and I hope you do, because I don't want this
to stop you from ever doing project based work. I
think it's a lesson. It's not a cheap lesson, but
it's a lesson that you can take moving forward and
(13:11):
hopefully like, Okay, you're smarter your experience. Now you know
what's what. You can use this link and you can
use this tax withholding estimator tool that the IRS offers
maybe the next time that you get a contract role
and then you can you know, kind of set that
money aside in advance. And then there's also a form
(13:34):
even to ask for relief in terms of IRS penalties. Okay,
so I'll put that in the show notes for you,
my darlin. And then let's walk about that credit card debt.
Oh so while you're paying off this tax debt, it
may make sense like I would say, let's look at
how we can get the eleven thousand of credit card
debt kind of situated. I don't know what your credit
(13:55):
score is. By the way, if y'all are submitting questions,
it really helps me actually to understand and what your
credit score is, because that will dictate what some of
your best options are. I'm never going to have all
the information I need to give y'all like a completely
holistic here's a great game plan answer for y'all. Y'all
know that you listened to the show before, but still
understanding your credit score range or credit score would be
(14:16):
very helpful. I'm just going to assume you have decent credit.
You have this debt, but you've been making your payments
on time. Maybe it's like in the mid six hundreds
to low seven hundreds right now. You may qualify for
a balance transfer, so you could get some of that
credit card debt and moved on to a zero percent
interest credit card for twelve months, eighteen months, and some
of the options are. If you're looking for different options,
(14:38):
I usually would just go to nerd wallet or bank
rate and see, you know, what the best balance transfers are.
You know, and also you may just be getting you know,
letters in the mail with balanced transfer offers. Don't obviously
just take any offer you get in the mail. You
should check the legitimacy of that, but a balance transfer
could at least maybe help you move some of that
debt onto a zero percent interest card card, which will
(15:00):
then you know, then you kind of can make the
minimum payment on that card while you're putting the majority
of your extra money that you have for your debt
payment toward that tax payment. So the debt snowball method
is when you put the debt in order of lowest
balance to highest balance, and then you start to pay
down the lowest balances first and work your way up.
(15:21):
And research there was a study that came out saying
that the debt snowball actually is the most effective in
terms of like consistency, because you build that momentum by
paying off small balances first. You start to get more
excited and you keep going. However, the best you know
on paper technique is the avalanche, where you order your
(15:42):
debt payments in order of most expensive interest to least
expensive interest, and that'll save you the most money over
time because you're tackling the most expensive debts first. In
your case, However, that may look like, oh, I should
pay my credit cards off first, because your credit card
interest rates are probably twenty five twenty six, you know,
(16:03):
twenty nine point nine to nine percent. These days, it's nuts,
whereas IRS debt, you are charge penalties and interest. But
I don't think it's anywhere near that high. So it
may look like, okay, the credit card debt should come first.
It's higher interest, but the IRS is scarier. They can
take your stuff, they can. I think I mentioned wage
garnishment leans. I will even forgot to say, like if
(16:26):
you have a debt unpaid, they can take your passport.
It's a little bit scarier. So I think IRS gets
a little bit of a bump on the priority list
in this case. So in the meantime, with this credit
card debt that you have, you can look at a
balance transfers also the you know, if the it doesn't
sleven thousand dollars is a lot, right, I don't want
to underplay that, But I don't think this is going
(16:47):
to wreck your life. I think this is the kind
of debt that with some you know, real intense focus
and budgeting and like aggressive budgeting and decreasing your expenses
and being ruthless about it. You can pay this down
the next year. I think you can find a thousand
bucks a month. I would look for five hundred extra
dollars a month, if not a thousand to start putting
toward these debts. Maybe you even need to start contracting
(17:10):
again to you know, create an additional income stream so
you can start paying off this debt. But I really
want to motivate you because this is not un get overable.
This is not insurmountable. Eleven thousand plus five thousand in
texts at sixteen thousand. I know you got this, girl.
I know you do maybe a year, maybe a couple
of years. But I think what's really challenging in this
(17:32):
situation is that that feeling of like you're kind of
a deer in headlights because it seems really stressful. And
I'm just really proud of you for even you know,
obviously leaving this question because it takes a lot too
and you're so transparent about it. That's wonderful. But then
it's like sitting down to actually do the thing, to
start chipping away at the debts that you have, break
(17:55):
up what you got to do into some small, realistic goals.
So you're listening to this, now, let's make the goal
to go to the IRIS link that I sent and
look through all of the options to see if you
can get on a payment plan or if you can
get an offer and compromise. But make that that's a big,
kind of hairy, scary goal for one day, but not undoable.
Let's make that your first task for one for the
(18:16):
next day, download some sort of budgeting app. I've been
using Rocket Money. I've also been using Monarch Money. Hear
good things about those two. I like Rocket, I like Monernic.
I think they're very similar. Rocket has this feature where
it helps you identify recurring payments and offers to call
and get rid of those recurring payment for subscriptions that
(18:36):
you no longer want. Although I've had really terrible luck
a lot of times they're not able to contact the
companies for whatever reason. But anyway, they do offer that
as a as a service. At least it makes it
easy for me to see how many subscriptions I have
and then figure out which ones I want to get
rid of. But I want you to get one of
these apps. I want you to have everything in one
place and then look at your credit cards and order
(18:58):
them the way that you want to tap them. You
can start make one day the day where you're going to,
you know, get those budgeting get those management money management
apps set up and at least have all your accounts
in one place. I need you to make a decision
about credit cards in general, it's really hard to get
(19:19):
out of credit card debts while credit card debt while
still using your credit card. And the thing about the
balance transfer I think about the balance transfer is it's
going to feel like once that money you know has
been transferred to a new card, it's going to feel
like you have no more credit card debt on that card,
and you may start to rack up more charges on
(19:41):
that card. So one of the days, one of the
tasks on one of the days you have to do is, Okay,
let's look at the budget and decide how am I
going to pay for my necessary expenses and not have
to continue putting money on these cards. And I need
you to have an answer for that. It may not
be the most comfortable answer. Sometimes it may mean, well, damn,
(20:04):
I had to find some extra income or else I'm
not going to be able to cover my expenses for
the month. Things are just I don't got to tell y'all,
it's expensive out here, and it may be that your
expenses are just outweighing your cash flow for the month.
So hopefully with that money app and kind of assessing everything.
You can get a sense of here's what I have
(20:25):
coming in, here's all my bills and expenses. You know,
Rocket Money and Monarch can help you identify some of
your discretionary money, some of your extras that you can
you can get rid of to free up more money
and your budget each month. And you're going to have
to be really focused on paying down this debt, and
that's going to mean saying no to some experiences you
(20:48):
maybe want to have this year, some events you maybe
wanted to attend, gifts you wanted to give. It's not
gonna lie. It's gonna suck. It's gonna suck while you're
paying this down. And I think that's a little bit of,
you know, just a reality check there. It's not gonna
be fun. And I don't I don't think anyone. This
is not one of those like commercials for like weight
(21:11):
loss drugs or diabetes medications where it's like, oh, we're
canoeing and we are you know, painting on a mountaintop
and it's all joyous while we're getting over these these issues.
Now it's it sucks because it means you can't you
can't do what you were doing before. You know as
much because you have this new goal. But you're with us,
You're in the BA fam, and we're all on this
(21:31):
journey together. So check in with me like dm me.
I wish you you could even join the Patreon and
keep BA fam. We have a chat function there you
can let us know how it's going. But find your
people who can support you on this journey and people
who are who are just aware of what you're going
through because they're gonna make it like the least painful possible.
You're not gonna feel like you're missing out because they're
(21:54):
just gonna keep encouraging you. And that's what we're here
to do right now. On top of all this, I
also want to encourage you to practice some self care.
Self care can be free, okay, but during the time
when you're paying down this debt and even now, like
there's stress, there's anxiety. I'm really happy to hear that.
And you said you were working with a life coach.
(22:15):
I think you also mentioned in therapy, but like find
a way to check in with yourself mentally and to
save some space for yourself just to yeah, take a breather,
relieve some of the stress and remove some of the
shape around. This can be talking with a friend, it
can be talking with you know, be a fan, whatever
community that you want to turn to. But do something
(22:36):
that pours back into you at least once a week,
maybe even once a day. Little ten minute meditation a
day really keeps the scaries away sometimes. But use mindfulness, journaling,
any regular routine to pour back into yourself and remind
yourself that you're okay, you got this. You'll get through this.
(22:57):
There's no shame in it. You have a strategy. It's
just going to take time now, time and consistency and
discipline to get through it. And I know you got this.
This okay, all right, va Fam, Thank you so much
for listening to the show. If you want to submit
your question, voice memos are more than welcome. You can
DM me at Brown Ambition Podcast on Instagram. You can
(23:20):
also email me Brown Ambition Podcast at gmail dot com.
Thank y'all so much. I hope to see you at
my AI Strategy Workshop webinar later this month for twenty
fifth Again, RSVP link is going to be the show
notes and until that, ba Fam, I'm sending you so
much love and listen if y'all want to send your
Michelle Obama RSVP to the Internet like I'm collecting them now.
(23:44):
It's fine, don't don't. We don't got to be there, Okay,
we got other things to do. We are otherwise occupied. Okay,
take care of via fam. Bye.
Hey, hey, vaham, it's time. Wait, I sound a little pathetic.
I just realized, y'all, I'm not feeling too well. It's
been back to school and one of my two little
boys has brought back a bug already. And I don't
know what it is that I got. Maybe it's just
a case of the mid twenty twenty five blues or flu.
(00:27):
I don't know, but not feeling my best. So for
anyone who's listening, who, oh Lord, have mercy, there's a
cricket on my microphone. Okay, well, at least I was
able to just liberate a cricket from my studio. Oh
my gosh, in my like, is that? Do I have
like seven years of good luck Netmark? Little tiny green
(00:48):
crickets supposed to be good luck? Or was that just
from mulan And I don't know, but yeah, I'm not
feeling my greatest. That being said, I'm excited to be
here and I'm really excited to listen into today's question.
We actually had a listener who took the time to
send a voice note to me on IG and I
just thought it was really sweet. So I'm actually going
(01:09):
to play the question for y'all. Meant to this listener
who shall remain anonymous. But before I do, I just
want to say that all of the mixed feelings that
y'all are feeling in the wake of the assassination on
Charlie Kirk's life this week, I am feeling the exact
same things. I feel like Michelle Obama not going to
(01:29):
the inauguration at the beginning of the year. And I
know that y'all know exactly what it means if someone
sends you a picture of Michelle Obama in response to
an RSVP for an event. I'm just gonna issue my
Michelle Obama jpeg file. Just download, upload that to the Internet,
(01:50):
and you know, there we go. I have uploaded that file.
I also want to bring this spotlight back to us. Okay,
I am hosting in a couple of weeks here September
twenty five, at eight pm, I'm doing a webinar that's
totally free. I'm going to be sitting down with y'all
anyone who wants to join, and we're going to work
through together some of the most popular AI tools that
(02:12):
are available. But I'm going to show you how to
use those AI tools to get on top of your
finances and also to do what you can to beef
up your career prospects during a really challenging job market.
So I'm going beyond just how do I judge up
my resume chat GPT or how can I make my
resume fit for this job. I'm going beyond that, and
(02:33):
I'm hoping that I'll see some of y'all there. So
if you want to join, registration is still open. You
can go to the show notes of the podcast now
and register. It is. It's going to be a good time.
It's going to be a supermatenty fith eight pm, and
I hope to see y'all there. All right, let's get
into today's question. It is a juice you want. This
(02:54):
question comes from a listener who is challenged by a
couple of different types of debt, including some tax Let's
get into a bafan.
Speaker 2 (03:01):
Hi, Mandy, I just started listening to your podcast in
this past year as I've for the first time in
my thirty four years of life, had started to look
at my finances and decided to stop being afraid of them.
And I listened to your eleven thousand dollars credit card
debt episode. I also have about eleven thousand dollars of
(03:23):
debt and credit card in credit cards. However, I also
have probably about four thousand or five thousand in debt
from the years when I worked as a contractor with
the Smithsonian and a freelancer pursuing that you know, nonprofit
art life that our immigrant parents did not want for us.
(03:47):
And I don't know how to tackle this debt, and
I feel really stuck. I think I should probably do
my tax debt first, but that seems intimidating, and you know,
I'm trying to figure out how to do it all
to be realistic, and I get in that cycle of
I'm not doing enough, so why do anything at all? So,
(04:10):
you know, working through that with my therapist, but I
just wanted to know if you have very tangible strategies
for dealing with it and ways to cope with the
stress from it. And yeah, I'm ready.
Speaker 1 (04:28):
All right, I'm gonna call you, Beth. I'm gonna keep
you anonymous, but Beth, thank you so much for your question.
I chuckled a little bit at the fact that, you know,
the trying to live that nonprofit art life that our
immigrant parents did not want for us. So you're a
little rebel. Huh, you try to work the Smithsonian. It's
not the kind of thing where you know you. I
(04:51):
don't want you to feel like your parents. My parents
were right, I should have never gotten into this space.
But it does sound to me like you did that
on a contract basis, and like so many you know,
first time contractors, consultants, anyone who's working on a ten
ninety nine, it's really challenging to then be completely responsible
(05:13):
for setting aside money for taxes. Same boat club over here. Okay,
I don't think anyone who's listening who on their very
first you know, contract gig where they earned. I think
you have to think it's something like if you get
more than six hundred dollars on a ten ninety nine,
then you owe taxes on it, you know, obviously depending
on the income source. But yeah, it's completely understandable. It's
(05:37):
this whole tax system is so jacked up. It is
so set up for the super rich to get off
scot free and for the everyday you know, solopreneurs, small
business owners, you know, individual taxpayers to really struggle and
to feel like you're constantly in like some sort of
(05:58):
like researchers game, like mouth trap or pac Man or something.
So I get it, and my mandy money makers know
very well that I have a lot of anxiety when
it comes to taxes myself. I can't think I haven't
particularly ended up in a ton of tax debt. Where
(06:18):
I have ended up struggling is like I make goals
to pay myself first, like contribute to my four one K,
my solo for one K, or my step ira and all.
My accountant will sort of make her plan for my
taxes based on the amount that I said I was
going to contribute to those retirement accounts, and then I
(06:40):
just won't end up doing it. And then she's like, girl,
you owe yourself. I think one year, I owe myself
eighteen thousand dollars. I said, I don't know if I
can come up with this eighteen k. I said, I
was going to contribute, but it was an issue, right
because she had sort of been putting together her my
tax liability plan and you know, trying to get me
to oh the least amount possible and by not contributing
(07:03):
that eighteen thousand, which in a sense meant I wasn't
reducing my taxable income by eighteen thousand. I wasn't sheltering
that money from taxes. I was kind of jacking up
her plan. I was making it harder for her to
do her job. I did end up finding the eighteen K,
and I'm so glad I did. But yeah, taxes as
(07:25):
a an entrepreneur, solopreneur, you know, even just someone who
has a side hustle, it's difficult. It sure is. But
you don't need me to tell you that. You're already
living in the challenge. You have that four to five
thousand dollars in debt from those years that you worked
as a contractor. You also have about eleven thousand dollars
(07:47):
of credit card debt and different credit cards. So what
is it about that number eleven thousand. I know you
said you listened to that episode. I did from another
listener who had about eleven thousand dollars of debt. So
all I can say is, y'all ate alone. Y'all already
know that. But when you're looking at these different types
of debt and wondering which one to tackle first, I
(08:09):
think taxes have to come first in this case. Oh wait,
I didn't do my spiel. I am not your financial advisor.
I'm not your investment advisor. I'm not a professional you
certified in any of those things. So I'm just a
girl with some advice and some knowledge based on my
experience and obviously decades of work in business and finance journalism.
(08:33):
But what I will say is the IRS don't play.
The IRS has many ways to recoup a debt in
many different in different and more potentially damaging to your
life ways than just a credit card would. So the
thing about the IRS is they can put a lean
on your property. So if you own property like a
(08:56):
home that's most typical, Typically what happens the IRS can say, oh,
you don't actually own this, we do now for four
to five thousand dollars of debt. That's not enough for
them to like take over ownership of your house, but
it can be something that goes. You know, they can
put a lien on it, and then if you were
(09:17):
to ever sell, like they would make sure they get
their cut. They can also potentially garnish your wages in
the future if the debt gets delinquent for too long
and then they sue you, And that is a possibility.
If you're not making payments on a tax debt, it
is likely that you could end up being sued and
then taken to court, and unless you're able to mount
(09:40):
a strong case for why you're unable to pay that debt,
the judge may rule. And a lot of people don't
even show up to fight those types of complaints, you know,
when it comes to tax debts, and so they end
up the judge will automatically rule in favor of the creditor,
whether it's a credit card company, the lender, or in
(10:01):
this case, the IRS, and say, okay, we're going to
garnish any w two wages you earn. We're going to
garnish for a certain amount. I believe it's up to
fifteen percent. And even like Social Security income can be
garnished and you may face other penalties, late penalties, things
like that. So it can be riskier to leave tax
(10:21):
debt unpaid. And I would say, when it comes to
tax debt, I need you to be on the phone.
And this is really hard to do, right because the
IRS has never been I don't know if it has
been as under resourced as it is now. Maybe there's
other times in history, but they've had mass layoffs. They
got doged, and even before they were doged, they were
(10:42):
struggling with understaffing and old systems and all that. But anyway,
you want to try to get on the phone with
the IRS and ask to be put on a payment plan. Also,
make sure that you are actually filing your tax returns
each year, so even if you haven't been able to
pay your taxes, you still have to file your tax returns.
(11:02):
If you are really overwhelmed by the debt and you
don't have any additional funds to pay toward it, you
can ask them to do something called an offer in compromise,
which basically is the equivalent of settling a debt for
less than ode. The IRS does have an office called
the Taxpayer Advocate Service, so you could reach out to them.
I'll put a link in the show notes where you
(11:24):
can find more information. Taxpayer Advocate Service is really put
in place to protect us, the taxpayer, from predatory practices
from the whole IRS process in general, So if you
ever have a complaint about an experience you had, you
can reach out to them. But also they may have
some resources for just everyday taxpayers who are struggling to
(11:46):
pay back their debt, and it can at least offer
you some guidance I think the scariest thing about this
advice that I'm giving is probably like getting on the
phone with the IRS? Where do you even like, what
even is the phone number to get on the phone
with the IRS. I'm like this. I think heading to
IRS dot gov as your first stop is a good
first step. Again, because they are so understaffed. I think
(12:07):
there's a lot of someone was doing their job. They
create a lot of documents, a lot of PDFs through
the IRS dot gov that have a lot of like
evergreen information. They have a lot of evergreen content, So
at least somebody was doing their job, got us, you know,
set up for success in spite of all these firings
and layoffs that have been happening. So I'm gonna put
(12:28):
a link in the show notes to like your first
you know, starting place at IRS dot gov. It's the
help page. So if you scroll down to Payments and Penalties,
they have some links here to different payment options, payment
plan or installment agreement requests. You can view your balance
and payment activity, and again it has a link to
that offer and compromise option that I talked about. There's
(12:50):
additional links on understanding if you'd get a federal tax lean.
Like I mentioned earlier, there's the Office of Appeals. There's
also for the future if you do take on additional work,
and I hope you do, because I don't want this
to stop you from ever doing project based work. I
think it's a lesson. It's not a cheap lesson, but
it's a lesson that you can take moving forward and
(13:11):
hopefully like, Okay, you're smarter your experience. Now you know
what's what. You can use this link and you can
use this tax withholding estimator tool that the IRS offers
maybe the next time that you get a contract role
and then you can you know, kind of set that
money aside in advance. And then there's also a form
(13:34):
even to ask for relief in terms of IRS penalties. Okay,
so I'll put that in the show notes for you,
my darlin. And then let's walk about that credit card debt.
Oh so while you're paying off this tax debt, it
may make sense like I would say, let's look at
how we can get the eleven thousand of credit card
debt kind of situated. I don't know what your credit
(13:55):
score is. By the way, if y'all are submitting questions,
it really helps me actually to understand and what your
credit score is, because that will dictate what some of
your best options are. I'm never going to have all
the information I need to give y'all like a completely
holistic here's a great game plan answer for y'all. Y'all
know that you listened to the show before, but still
understanding your credit score range or credit score would be
(14:16):
very helpful. I'm just going to assume you have decent credit.
You have this debt, but you've been making your payments
on time. Maybe it's like in the mid six hundreds
to low seven hundreds right now. You may qualify for
a balance transfer, so you could get some of that
credit card debt and moved on to a zero percent
interest credit card for twelve months, eighteen months, and some
of the options are. If you're looking for different options,
(14:38):
I usually would just go to nerd wallet or bank
rate and see, you know, what the best balance transfers are.
You know, and also you may just be getting you know,
letters in the mail with balanced transfer offers. Don't obviously
just take any offer you get in the mail. You
should check the legitimacy of that, but a balance transfer
could at least maybe help you move some of that
debt onto a zero percent interest card card, which will
(15:00):
then you know, then you kind of can make the
minimum payment on that card while you're putting the majority
of your extra money that you have for your debt
payment toward that tax payment. So the debt snowball method
is when you put the debt in order of lowest
balance to highest balance, and then you start to pay
down the lowest balances first and work your way up.
(15:21):
And research there was a study that came out saying
that the debt snowball actually is the most effective in
terms of like consistency, because you build that momentum by
paying off small balances first. You start to get more
excited and you keep going. However, the best you know
on paper technique is the avalanche, where you order your
(15:42):
debt payments in order of most expensive interest to least
expensive interest, and that'll save you the most money over
time because you're tackling the most expensive debts first. In
your case, However, that may look like, oh, I should
pay my credit cards off first, because your credit card
interest rates are probably twenty five twenty six, you know,
(16:03):
twenty nine point nine to nine percent. These days, it's nuts,
whereas IRS debt, you are charge penalties and interest. But
I don't think it's anywhere near that high. So it
may look like, okay, the credit card debt should come first.
It's higher interest, but the IRS is scarier. They can
take your stuff, they can. I think I mentioned wage
garnishment leans. I will even forgot to say, like if
(16:26):
you have a debt unpaid, they can take your passport.
It's a little bit scarier. So I think IRS gets
a little bit of a bump on the priority list
in this case. So in the meantime, with this credit
card debt that you have, you can look at a
balance transfers also the you know, if the it doesn't
sleven thousand dollars is a lot, right, I don't want
to underplay that, But I don't think this is going
(16:47):
to wreck your life. I think this is the kind
of debt that with some you know, real intense focus
and budgeting and like aggressive budgeting and decreasing your expenses
and being ruthless about it. You can pay this down
the next year. I think you can find a thousand
bucks a month. I would look for five hundred extra
dollars a month, if not a thousand to start putting
toward these debts. Maybe you even need to start contracting
(17:10):
again to you know, create an additional income stream so
you can start paying off this debt. But I really
want to motivate you because this is not un get overable.
This is not insurmountable. Eleven thousand plus five thousand in
texts at sixteen thousand. I know you got this, girl.
I know you do maybe a year, maybe a couple
of years. But I think what's really challenging in this
(17:32):
situation is that that feeling of like you're kind of
a deer in headlights because it seems really stressful. And
I'm just really proud of you for even you know,
obviously leaving this question because it takes a lot too
and you're so transparent about it. That's wonderful. But then
it's like sitting down to actually do the thing, to
start chipping away at the debts that you have, break
(17:55):
up what you got to do into some small, realistic goals.
So you're listening to this, now, let's make the goal
to go to the IRIS link that I sent and
look through all of the options to see if you
can get on a payment plan or if you can
get an offer and compromise. But make that that's a big,
kind of hairy, scary goal for one day, but not undoable.
Let's make that your first task for one for the
(18:16):
next day, download some sort of budgeting app. I've been
using Rocket Money. I've also been using Monarch Money. Hear
good things about those two. I like Rocket, I like Monernic.
I think they're very similar. Rocket has this feature where
it helps you identify recurring payments and offers to call
and get rid of those recurring payment for subscriptions that
(18:36):
you no longer want. Although I've had really terrible luck
a lot of times they're not able to contact the
companies for whatever reason. But anyway, they do offer that
as a as a service. At least it makes it
easy for me to see how many subscriptions I have
and then figure out which ones I want to get
rid of. But I want you to get one of
these apps. I want you to have everything in one
place and then look at your credit cards and order
(18:58):
them the way that you want to tap them. You
can start make one day the day where you're going to,
you know, get those budgeting get those management money management
apps set up and at least have all your accounts
in one place. I need you to make a decision
about credit cards in general, it's really hard to get
(19:19):
out of credit card debts while credit card debt while
still using your credit card. And the thing about the
balance transfer I think about the balance transfer is it's
going to feel like once that money you know has
been transferred to a new card, it's going to feel
like you have no more credit card debt on that card,
and you may start to rack up more charges on
(19:41):
that card. So one of the days, one of the
tasks on one of the days you have to do is, Okay,
let's look at the budget and decide how am I
going to pay for my necessary expenses and not have
to continue putting money on these cards. And I need
you to have an answer for that. It may not
be the most comfortable answer. Sometimes it may mean, well, damn,
(20:04):
I had to find some extra income or else I'm
not going to be able to cover my expenses for
the month. Things are just I don't got to tell y'all,
it's expensive out here, and it may be that your
expenses are just outweighing your cash flow for the month.
So hopefully with that money app and kind of assessing everything.
You can get a sense of here's what I have
(20:25):
coming in, here's all my bills and expenses. You know,
Rocket Money and Monarch can help you identify some of
your discretionary money, some of your extras that you can
you can get rid of to free up more money
and your budget each month. And you're going to have
to be really focused on paying down this debt, and
that's going to mean saying no to some experiences you
(20:48):
maybe want to have this year, some events you maybe
wanted to attend, gifts you wanted to give. It's not
gonna lie. It's gonna suck. It's gonna suck while you're
paying this down. And I think that's a little bit of,
you know, just a reality check there. It's not gonna
be fun. And I don't I don't think anyone. This
is not one of those like commercials for like weight
(21:11):
loss drugs or diabetes medications where it's like, oh, we're
canoeing and we are you know, painting on a mountaintop
and it's all joyous while we're getting over these these issues.
Now it's it sucks because it means you can't you
can't do what you were doing before. You know as
much because you have this new goal. But you're with us,
You're in the BA fam, and we're all on this
(21:31):
journey together. So check in with me like dm me.
I wish you you could even join the Patreon and
keep BA fam. We have a chat function there you
can let us know how it's going. But find your
people who can support you on this journey and people
who are who are just aware of what you're going
through because they're gonna make it like the least painful possible.
You're not gonna feel like you're missing out because they're
(21:54):
just gonna keep encouraging you. And that's what we're here
to do right now. On top of all this, I
also want to encourage you to practice some self care.
Self care can be free, okay, but during the time
when you're paying down this debt and even now, like
there's stress, there's anxiety. I'm really happy to hear that.
And you said you were working with a life coach.
(22:15):
I think you also mentioned in therapy, but like find
a way to check in with yourself mentally and to
save some space for yourself just to yeah, take a breather,
relieve some of the stress and remove some of the
shape around. This can be talking with a friend, it
can be talking with you know, be a fan, whatever
community that you want to turn to. But do something
(22:36):
that pours back into you at least once a week,
maybe even once a day. Little ten minute meditation a
day really keeps the scaries away sometimes. But use mindfulness, journaling,
any regular routine to pour back into yourself and remind
yourself that you're okay, you got this. You'll get through this.
(22:57):
There's no shame in it. You have a strategy. It's
just going to take time now, time and consistency and
discipline to get through it. And I know you got this.
This okay, all right, va Fam, Thank you so much
for listening to the show. If you want to submit
your question, voice memos are more than welcome. You can
DM me at Brown Ambition Podcast on Instagram. You can
(23:20):
also email me Brown Ambition Podcast at gmail dot com.
Thank y'all so much. I hope to see you at
my AI Strategy Workshop webinar later this month for twenty
fifth Again, RSVP link is going to be the show
notes and until that, ba Fam, I'm sending you so
much love and listen if y'all want to send your
Michelle Obama RSVP to the Internet like I'm collecting them now.
(23:44):
It's fine, don't don't. We don't got to be there, Okay,
we got other things to do. We are otherwise occupied. Okay,
take care of via fam. Bye.
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