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January 21, 2020, 10:41 am

Can the IRS Seize Your Property?

by: The Financial Blogger    Category: Assets and Net Worth

Many people are surprised to learn that the IRS can seize your property and they can generally do so without even going to court. Unpaid taxes are serious debts, with serious consequences. If you don’t actively engage with the IRS when you have an outstanding debt, they could seize your property or garnish your wages by levying your assets.

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What is a Notice of Levy?

If you receive a Notice of Levy, your natural reaction will probably be to start panicking. However, it’s not too late to resolve the situation. To start with, you will want to know where to get help and find answers to questions like what is a levy? Fortunately, it can be easy to access assistance when you are having difficulty meeting your tax liabilities.

A levy enables the IRS to seize your assets and property in lieu of unpaid taxes. This means that the IRS will take ownership of one or more of your assets, such as your house, your vehicle or your wages. Once a levy is in place, it will generally remain functional until the outstanding amount has been paid off in full.

Can a Levy Be Avoided?

Absolutely. Paying your taxes in full is the easiest way to avoid the IRS taking action to collect the debt. Even if you have received a levy notice, you can usually stop the levy being applied to your assets by paying the outstanding debt.

However, if you are unable to pay off the outstanding debt, you can still stop the levy being placed on your property. By engaging with the IRS, you may be able to come to an agreement and pay off the outstanding amount in small increments over a longer period of time, for example.

Alternatively, the IRS may accept an Offer in Compromise. This means that you will pay a reduced amount in settlement of the outstanding debt. For this to be a viable option, however, you will need to show that your assets, income and necessary expenditure will make it extremely difficult for you to pay the debt in full.

Managing the Levy Process  

If you receive a Final Notice of Intent to Levy, it will usually be accompanied by a Notice of Your Right to a Final Hearing. These must be issued no later than thirty days before a levy is applied to your property.

Ideally, you would come to an agreement with the IRS well before these notices are issued. However, if you have already received a levy notice, you will need to take action swiftly to stop the process. Although you can manage this process alone, it can be advantageous to seek professional assistance.

Getting Specialist Help

Seeking advice from an experienced tax attorney can be useful when you are facing action by the IRS. With in-depth knowledge of the law and procedures, a tax attorney is well-placed to resolve the situation quickly and in your favor. Furthermore, having a tax lawyer act on your behalf can give you the confidence to deal with the situation and resolve your outstanding debt, which will minimize the negative impact of the situation and enable you to move on.

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July 10, 2013, 5:00 am

Net Worth Update – Back From Vacation

by: The Financial Blogger    Category: Assets and Net Worth

 

 

Whats better than a few days off? I guess nothing!

 

It has been a little bit over a week that I haven’t opened up my laptop to write an article for my blogs. I wasn’t really on vacation per se since I was in a training course for work. The problem is that I usually blog in the morning and I didn’t have a single spare moment last week to write anything. I thought I would look at it on the bright side and see it as a week off from blogging. This is usually good for my level of inspiration!

 

I decided to start my week of writing with my quarterly net worth update. I’ll also update my 2013 personal goals at the same time.

 

You Need Money to Make Money

 

My net worth barely budged over the past three months. My assets are sitting slightly under $566K but there were some movements. I cashed out some of my employer stocks (which is part of my plan to pay off debts)… but to invest in our new project; my wife’s daycare. We needed a few things (furniture, toys, paint) before we could open up in September. This is why we decided to take about $2,000 and invest it in this project. Since my wife is expected to earn roughly $2,000 in net income (after expenses and taxes) per month, this will be repaid by the end of September already. After this point, most of this extra income will be directed towards our debts to achieve our main financial goal for 2013: dropping under 300K in debts. When you want to make more money, you should never hesitate to invest. You don’t need a lot, but you often need money to make money.

 

The second major change in my assets is the gain in value of my pension plan. I received my update as at December 31st 2012 and my value is now up to $33,386 (from 26,131). Since it is a defined pension plan (e.g. the employer will pay me a fixed pension at retirement), this is an actuarial value calculated in the event I would leave my employer prematurely. Each year it goes up by 5-7K so it’s always nice to receive my booklet to update my net worth!

 

Unfortunately, we also had to update our company shares. Since there was a small drop in income compared to last year, the share value dropped accordingly. The method we used to calculate what our company is worth is quite simple:

 

Average of past 12 months of gross revenue * 36 months debts + cash in bank account

This enables us to follow our progression and plan for the future. On the other hand, I have no desire to sell so this is definitely a virtual value. Fortunately, this drop of value was compensated by my pension plan so it doesn’t really affect my total net worth.

 

I opened my TFSA account to fund my children’s private education once they reach high school. Since I still have debts to pay off, I’ve started investing $50 every two weeks. I continue to use the “pay yourself first” method to fund my children’s education. So far, it is going pretty well since I struggle to pay off my debts, but I make sure my kids will have enough funds to study what they like without bothering with money. Opening a TFSA this year was another of my personal goals, yeah!

 

Here are my assets & liabilities as of July 2012:

Assets: $565,947

 

ASSETSPREVIOUS
MONTH ($)
CURRENT
MONTH ($)
CHANGE (%)
CHECKING ACCOUNT$1 000$1 0000,0%
EMPLOYER STOCK
ACCOUNT
$2 507$3 85353,7%
RRSP ACCOUNT$35 573$37 7346,1%
RESP$2 003$2 63331,5%
PENSION PLAN$26 131$26 1310,0%
HOME$351 640$351 6400,0%
COMPANY SHARES$131 521$131 5210,0%
MAZDA TRIBUTE$12 586$11 284-10,3%
MAZDA RX-8$800$--100,0%
TOTAL$563 761$565 7960,4%

Liabilities: $311,995

 

DEBTSPREVIOUS
MONTH ($)
CURRENT
MONTH ($)
CHANGE (%)
CREDIT CARD$6 831$5 092-25,5%
LINE OF CREDIT$19 597$19 9181,6%
HELOC$263 015$262 803-0,1%
CAR LOAN$12 586$11 284-10,3%
Personal Loan$8 333$7 916-5,0%
Pool Loan$5 370$5 290-1,5%
TOTAL$315 732$312 303-1,1%

 

Net Worth: $253,979

 

I’m a little bit disappointed (once again!) about my debts since it didn’t go down by much. Since we used about $2,000 to build a nice day care, I can always find solacethat I don’t owe this money. Still, I was looking for a little bit more in terms of debt repayment. At least, I know that my bonus will be big enough to cover at least 6K in debt repayment in January. Therefore, I need to concentrate on finding the next 6K and I have almost 6 months to do it. I think it’s a realistic, especially since my wife will be earning extra income from the daycare.

 

It sucks that she has to go back to work in the near term but it’s good to see this money coming!

 

Weight: 185lbs

 

Another of my personal goals for 2013 was to lose weight. I was showing 193 lbs in January and am now down to 185 lbs. I wish I could drop under 180lbs by the end of the year but this will require a lot of work and constant healthy eating habits!

 

In order to achieve my weight loss goal, I decided back in January to run at least 10 miles per week. I thought that by running 500 miles for the year (I’m giving myself 2 weeks of vacation), I should be able to lose weight. So far, I am holding on with 293 miles ran in 28 weeks. I’m even running a few extra miles to not fall behind. The key is really to run at least 3 times a week for a minimum run of 3 miles each time. This is good as I burn fat while I gain muscle at the same time.

 

Total Income for 2013 & Hawaii

 

My last two yearly goals are really linked to each other: I am aiming at a total income over $150,000 and want to go to Hawaii in 2014. So far, I haven’t done anything to put money aside for Hawaii but I’m working very hard on making over $150K. I need to make a bonus around 30K to make it happen and I’m right now expecting 15K if the year would end today. Since we are half way in our year, this still all makes sense. I just need to keep working harder to make it happen!

 

Do You Track Your Goals?

 

This is one thing I love about my blog is that I can track my goals publicly. It adds up to accountability and make me work hard to achieve them! Do you track your goals? How are you doing so far?

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June 17, 2013, 6:33 am

Forcing People To Save – The Best Idea a Gov’t Could Never Have

by: The Financial Blogger    Category: Assets and Net Worth,Pay off your Debts

 

 

Don’t you remember your motherand  father telling you: “you don’t understand today why I’m doing this, but one day, you will be thankful.

 

This is exactly why Governments should force the population to save; because we will be thankful one day! Instead, most Governments are currently acting like other parents who may have told you “You just have to do the same with your kids when you have them to get revenge as spending without looking behind and you can always charge your kids for your own mistakes!

 

There Is No Money Left in the Till

 

The housing bubble burst in the US between 2007 and 2008. At that point, Americans thought their houses were the biggest ATMs they had ever seen. All they had to do was to sign a few papers at their local bank and walk away with plenty of cash in their pockets. This cash was used to buy useful andbbasic necessities in order to have a decent life such as a second BMW, a 50’’ plasma TV, a heated pool, vacations at Disney and several pairs of shoes. Tell me really, who can live with only two pairs of shoes?

 

People didn’t care and we all know the end of the story: Americans saw their house values melt by more than 30% within 12 months. Even worse: companies started to cut jobs, increasing the unemployment rate and reducing the State revenues collected in taxes.

 

After this Tsunami, Americans woke up and started to work hard and spend less. They switched their focus on paying debts above everything else. They went from a household debt-to-income ratio of 125% to nearly 100% in a short period of time. You can clearly see on the following graph what happened:

 

debt to income ratio

 

Canadians are Dumber than I Thought

 

While I switched my focus on paying down my debts over the past two years, it seems like most Canadians don’t see it this way. As you can see on the above graph, the household debt-to-income ratio in Canada never ceased to increase and we are now showing a 165% ratio.  Since January 2000, housing prices surged by 123%. There are more condo towers being built in Toronto than on the entire American East Coast. Are we richer than Americans or Dumber?

 

Such stats make me think about two very bad scenarios:

 

#1 There is definitely a housing bubble in Canada (don’t expect to sell your house with profit next year 😉 ).

 

#2 Most Canadians are NOT saving for retirement (which means YOU will have to pay for their retirement).

 

This is maybe why we should force people to save money.

 

The Hell With it! The Gov’t ain’t Going To Tell Me What To Do With My Money!

 

I’ve heard this train of thought many times recently. In capitalism, most individuals hate seeing Governments telling them what to do. With all the horror stories in our history, I can appreciate this reflex. On the other hand, the same individuals expect Governments to save them from their own crap when they fail.

 

As a society, we have two options:

 

#1 We force people to save for retirement. Then we make sure everybody will get a minimum income at retirement. If everybody has made their own pension while they live, they will continue to spend money at retirement instead of being at the expense of the society.

 

#2 We let people spend their money on TVs and such and we tell poor retirees to starve in the street and die quietly because we don’t want to miss our TV shows. Since the Governments can’t afford to pay a pension to each individual, there are no other ways to let those people die in the street at one point.

 

Since we live longer and we have few workers to pay taxes, we can’t just imagine that we can afford to pay for everybody. Math in general is pretty simple. If you produce 10 sandwiches per day in your bag and you need to feed 20 people, you either give a sandwich to the first 10 and let 10 people starve or you give half of a sandwich to everybody and we are all a bit hungry. What happens if your production drops to 8 and you have 25 people to feed? This is where we are heading right now. So don’t tell me I can’t tell you what to do with your money since you will be begging for money in a few years from now and we both know the Government can’t handle this demand.

 

The problem is that most adults are still living like teenagers and think their parents (the Government) will be there to pay for their mistakes.

 

The Solution? A Forced Retirement Saving Plan!

 

Let’s call it a FRSP and force each worker to put at least 5% of their income into it. I don’t think the Government should manage this money because it’s not their primary job and this would make the difference between acting as a good father and acting as the godfather ;-).

 

The FRSP should be quite similar to what we know as a RRSP (Registered Retirement Saving Plan). We should allow people the same flexibility in term of investments but the contributions would be obligatory and directly taken from their paycheck.

 

Over time, the FRSP could be increased to roughly 10-15% in order to make sure everybody has a good pension to live on. But to start with, I would copy the Australian approach (they started at 3% back in the 90’s and they are expecting to raise it to 12% in 2020).

What’s Your Household Debt-to-Income Ratio? Mine is…

 

Just for fun, I calculated my debt to income ratio… I can tell you I’m contributing to the 165% average! As my latest net worth statement, my debt level is at $312K. I’m making roughly $135K per year so it makes a ratio of 231%… yikes!

 

But… considering I’m 31 with three kids, I’m definitely at the moment of my life where my debt-to-income ratio is at the highest. It’s totally normal. In the next 10 years, I’ll be working on paying off my debts and reduce that ratio significantly. At the same time, I’m saving a lot of money for my retirement. Each year, I contribute $5,000 in my RRSP (which is 3.7% of my salary) combined to a defined pension plan which as an actuarial value of $10,000 per year at least. Therefore, each year, I’m saving 11.11% of my total income for my retirement.

 

This is why my debt-to-income ratio is not worrying me. The problem is when you have such a ratio and you don’t save for retirement or try to pay down your debts. Therefore, you wake up one day, you are turning 50 and you still have a ratio over 150%. This is where the problem is!

 

How would you feel if we would force you to save money tomorrow in a FRSP?

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June 5, 2013, 5:00 am

Do You Live for Today or for Tomorrow?

by: The Financial Blogger    Category: Assets and Net Worth,Career

 

 

Last week, I wrote about our Daycare project in order to make more money. This is the compromise we found to make more money, reestablish our budget and still enjoy our quality of life. While my wife will be working and I will have to participate more in the household chores, my children will still come home from school early and we will be there to help them do their homework.

 

However, we won’t be chillin’ like villains as we are right now. Life has been pretty smooth since I moved into my house in the country three years ago. We haven’t worked much, enjoyed two awesome vacations in Virginia Beach and Disney World an even put money in the house so we have central AC and a pool for summers. As I have mentioned before, life was great but my debts were stagnating. It was somewhat impossible with such a lifestyle to aggressively drop my debts and I even ended-up with some consumer debt, something I’m definitely not used to having!

 

Working Harder with One Goal in Mind

 

I’m pushing harder on my online company while my wife will start her daycare for one specific reason: we want to reach financial independence. I’m tired of looking at my account balance to make sure I have enough money to cover for the month. I’m tired of thinking about the best moment to cash out my employer’s stock or waiting for my year-end bonus in order to breathe again. This strategy worked well for several years and enabled me to live beyond my means most of the time. This time is over.

 

Why Live for Tomorrow if You Have To Skip Today??

 

Some people think it’s better to live now and not wait for tomorrow. Their thesis is based on a pretty strong argument: what if you die tomorrow? Since nobody knows, I guess we can argue a long time about this concept of life. On the other hand, I’m tempted to ask: what if you live until 90? The odds are actually on my side as your chances of dying tomorrow are pretty thin compared to an average life expectancy over 80 now in industrial countries…

 

Nonetheless, I’ve always been a big supporter of the “live now and see for tomorrow”. I have a stable job with a solid pension plan so I don’t really mind about tomorrow. I spend a lot of money to enjoy life right now and even dropped my hours worked since 2009 to almost feel like a half-retirement (after all, who can work in a bank at 4 days a week? Hahaha!). But over the past six months, I realized that I want even more. I’ve been telling people as a half joke, half truth that I wanted to retire by the age of 35. I’m turning 32 this year and I now truly want to retire at 35. It’s not really retirement; it is more like financial independence.

 

The Price of Early Retirement

 

Dreaming about the morning where I will have to head for my coffee before playing golf is surely interesting but it doesn’t bring the dough home. While I’ve realized I want to retire early to enjoy life, I also realized that I have to make some sacrifices to make it happen. You can’t chill out and hope you will win the lottery.

 

The price of my early retirement is definitely in the number of hours worked. I have to go back to 50 hours/week while my wife goes from “0” to 40! Don’t get me wrong, she is definitely working more hours than me right now being a stay-at-home mom but those hours are not compensated. This is what we need: more money to pay off our debts faster!

 

By changing our life and making more sacrifices, it implies I will have to participate a lot more in doing household chores and that we will have to do the groceries over the weekend and so on. Our lifestyle won’t be as smooth as it was before. But I know that we will build a stronger future for us and our children.

 

I Won’t do That Forever

 

If I had to change my current lifestyle for the next 10 years or even for the rest of my life, the change wouldn’t make sense to me. The point here is to work very hard for the next three years and then, change  our lifestyle drastically. I did it once when I started working ten years ago and I was able to buy myself 5 years working 4 days a week. Next time, the goal will be to drop my hours worked to 25 hours/week. This is just enough to keep me busy and ensure a source of income. But I won’t be able to do this as long as I have all those debts!

 

Which Kind of SacrificesAre You Willing to Make?

 

I told my wife that the next three years won’t be fun. We will be working hard and this is going to be very tough. However, in three years, we won’t have discussion about our budget anymore. This is the whole point: being able to spend money as I want without having to check my bank account.

 

This new project implies that we will both crank up our hours worked. I don’t want to cut back on my current lifestyle and there is not much I can cut out of my budget anyways. This is why the only solution is to crank up the income for a few years and use this extra income to clear our debts.

 

Would you be willing to work like an animal for the next three years if it leads to financial independence? 

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June 3, 2013, 6:31 am

A New Month, a New Set of Priorities

by: The Financial Blogger    Category: Assets and Net Worth

 

 

Life changes at light speed faster than the internet!

 

During the month of May, I did the usual for me: I looked at my budget!

 

Instead of looking at my budget on Excel, I thought of printing my last two months of credit card statements. The advantage of paying everything with your credit card is that you have 100% of your expenses on a single document. Then, it’s pretty easy to determine what is going wrong with your budget!

 

We Eat Too Much

 

That’s a funny statement considering that I’m the largest of my family (by far) and I weight 185lbs. So the problem is not the amount of food we eat or the quantity but it lies in the quality. We eat a lot of fish, fresh vegetables and good meat over the weekend (like duck, lamb or filet mignon!).

 

This has a ridiculous impact on our budget. Considering that my two oldest children eat like adults now, our grocery bill has jumped to $1,200 per month! The worst part is that there is not much we can do about food. I might cut on my weekend dinners but it won’t reduce the grocery bills by much. I had to find somewhere else to cut…

 

Where Do You Cut When You Have Already Set Your Priorities?

 

My priorities are kids and family. Therefore, I won’t cut my savings plans for their tuitions fees nor will I tell them they can’t do the activities they like. The reality is that kids are expensive, lol! On my side, I noticed I could certainly eliminate a few bottle of wines per month. Besides that, I don’t spend too much money on clothing and the fact we have three kids really prevents me from spending money dining out!

 

I already brownbag my lunch every day and bring my own mug of coffee to work. I’ve negotiated all my insurance premiums (life, auto, house, etc) and saved a great deal.  built my own home gym and only play soccer at a total cost of $400 for the year. My wife does a few runs and a cardio class for about the same amount. It would be stupid to cut on our health for the sake of paying bills!

 

What’s left? Cars most probably…. but my Tribute is still under guarantee and I pay 0% interest (I know it’s hidden but I can’t drop the payment!) on it. My RX-8 didn’t breakdown in the past 12 months and therefore, doesn’t cost much these days (knock on Holy wood!). Since I only have to drive 5 minutes away from my house to get to work, it’s not with mileage I can do something either!

 

I stopped all renovations plans for my house (we are just painting this year) so I won’t have to spend much money there as well.

 

Here’s My Conclusion

 

Life is expensive when you want to do something with it. Doing sports is crucial for our family. It’s part of our main values along with eating well and healthy. A Family of 5 just requires a lot of money with such a lifestyle.

 

The interesting point I made after looking at my credit card statement was the following: I need to make more money. Hahaha! Isn’t that cliché?

 

But that’s the reality: the biggest expense I have right now is definitely my debt payments. If I can generate additional money to pay off my 2 personal loans and car loan, I will free up almost $800/month with that. Then, I can focus on paying down my mortgage and starting to think about becoming debt free.

 

Our first step will be to start a daycare in September. My wife will take care of a few kids and we will end-up adding at least $1,500 per month to our budget. We will cut our lifestyle quality but we will be going forward much faster with our financial plan.

 

Once the consumer debts are paid off (which would be within 18 months), we will be able to save a lot of money. We could either invest this money or simply pay down our debts faster.

 

The following point is to increase our online income and get rid of our corporate debts. The current debt payment plan is going well. Everything should be paid off within three years, probably less. After that, it will be time to withdraw a few thousand per month in order to pay our debts even faster.

 

Changing Our Priorities

 

The month of May was quite revolutionary this year. Instead of focusing on our lifestyle and not working too hard, we decided to switch focus and go “all-in”. I swear, I wouldn’t be a good poker player as I truly always want to go “all-in”!

 

My wife will focus on her daycare for the next three years and I’m adding more hours to my online company. Starting with the Niche Site Duel 2.0, I’ll be working more than my regular 10 hours/week. It’s time we make it grow and make money!

 

What are your priorities right now? Do you focus on living or making sacrifice to pay off your debts?

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