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AFRAID OF THE IRS

IRS-Agent

It’s amazing how many people are terrified of the IRS. They view this government organization as the ultimate parent or authority figure. Even when they know they’ll get a refund, the process of getting their financial numbers together (and the fear of a possible audit) are enough to make some people avoid dealing with their taxes altogether.

Some even believe they’ll end up in prison if they have avoided filing taxes for years. Debtor prison ended a long time ago, but fines for filing taxes late are real. Ignoring tax responsibilities does not make them go away, it merely increases work later and often has a penalty attached.

When you fear authority and do not take responsibility for your finances, you essentially put the responsibility on others to make your decisions. If you’re not taking action out of rebellion, you’re saying, “I don’t like your ideas, so go ahead and do whatever you want.” If you’re relinquishing your financial responsibilities because of insecurity, you might say, “I’m afraid of doing it wrong, so I will do nothing.” Although the intentions are different, the result is the same.

Sam, one of my of my clients, came to me one day to talk about his taxes. He said, “Um, I don’t want anybody to know this, but I haven’t filed my taxes in ten years.” He was very embarrassed. I completed his returns, and it turned out he would have had tax refunds, but lost all the money due to him because the IRS deadline to collect the refunds had passed.

Once Sam became current with his filings, he was relieved and promised he would never let it happen again. The next year, I called him to remind him to send me his tax information … and the next year and the next. I finally stopped calling him. Caution! There is no time frame if you owe the IRS money. Sam was literally paying the IRS 5,000 dollars per year to not file! It is truly amazing how expensive inaction can be—and inaction is often triggered by fear.

One way to avoid fear is to be intentional as you journey through the year. Purchase an accordion folder this week & start stashing paperwork into categories. File them as soon as you pay the bills or get a paycheck. Breaking the entire fiscal year into a weekly routine of filing paperwork into your different categories will make that big April 15th chore much more manageable!

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Facing Financial Fears

The Money Nerve

83% of Americans have at least one financial fear that keeps them up at night. And not surprising, almost a third worry about retirement and healthcare costs. Most people would rather ignore their nagging concerns and continue suffering in a familiar pattern rather than facing their fear and making a change.

Where are you really?

You can’t get to your ultimate destination if you don’t know your starting point.

The first key to alleviating your fear is to be honest. The more accurate the assessment, the more secure you will be in your position. You might be frustrated, but you will be aware of your financial truth and knowing where the breakdown occurs allows you to fix some of those issues.

Turn your insecurity around:

• Evaluate your social circle.
• Surround yourself with supportive friends.
• Budget truthfully so you know your financial position.

Review your income and expenses, explore where you spend your time and track down hidden costs. When you do these things, it is crucial to be honest with yourself. What do you actually earn? What do you really spend? What do you pretend is not relevant to your budget?

Most people “round up” on their income and “round down” on their expenses. If you want to get ahead and be financially successful, always lower your income estimates and raise your expense estimates. This trick will help give you a cushion for the realities of your inflows and outflows of cash.

The best way to face your financial fears is to create a budget. Having guidelines can bring comfort and structure to your plan. Start small & build your financial muscle over time. Do you have a savings account? Try to put a small percentage or dollar amount with each paycheck. If you get a raise, continue to live on the former salary & put the increase in the bank. That is a painless and highly effective more to build your wealth.

Check some of the tools we have placed HERE to help you jumpstart smart financial choices.

Don’t be scared ~ Be proactive!

Bob

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FACE YOUR FEAR

3x3TMN Head In SandI know many people who are afraid their entire financial life is going to fall apart at any minute. Sometimes, their fear does not correlate to their financial reality. It is an irrational emotion, based on what their family taught them or based on the unpredictable economic world we live in today.

I have friends who make high incomes; they have stunning homes, numerous cars, and staff who make their lives easier. Some of them have built their lifestyle through speculation and grand impulsive decisions. With all the material symbols of “success,” you would think they live a charmed and worry-free life! Yet, that is not always the case. Often there is a constant worry that the next project may not make it. Their mindset is, “We’re going to end up on the streets. We’re not going to make it” They are unable to enjoy their financial goodness and they live in fear.

Until recent years, America’s younger generation never feared they might lose everything. They have grown up in an era of abundance with no concept of scarcity. The media tells everyone that we all deserve nice homes, plenty of name-brand clothes, and the ability to buy almost anything we want at the store. Sometimes reality can be scary. When people see their friends losing jobs and realize that minimum wage can’t provide the lifestyle they grew up with, or see colleagues losing their houses, they start to live in fear themselves.

In the current economic reality, many people I interact with on a daily basis are afraid of losing everything they have worked for. Financial fear can make you stop in your tracks. Not taking a look at your account balances, not making any decisions, ignoring your family, and disregarding sound financial advice are a few examples of how people start to freeze up.

Don’t stick your head in the sand! Turn your fear around:

  • Take personal inventory. Knowing where you are makes it easier to plan your “next step” for the future.
  • Make your choices when you are at your best. Don’t go grocery shopping when you are hungry.
  • Face your fears. Write them down and explore ten new ways to find a solution. Circle one solution and begin to work on that.

Have any questions? Let me know via Facebook or Twitter and I will answer you. I bet many other people have the same question, too!

Let me know your thoughts – Bob