Debt hurts all of us. The longer we let it hang there, the more damage it does to our credit, to our lives, and to our stress levels. Fortunately, while the road to getting out of debt can be long, the process can be easy–if you plan for it. Here are 3 ways that your past years taxes can help you move out of debt and even earn you money!
- By filing your past years taxes. If you haven’t filed some of your tax returns, you should stop reading this and do that immediately. Lacking tax records is one of the biggest ways that people accumulate poor interest rates and poor credit scores and it is easily, easily fixed. In fact, many people who have failed to file their back taxes are actually owed a refund! By letting those old taxes linger unfiled, you’re only hurting yourself.
- By lowering your existing debt. Your past years taxes serve as a great financial record. If your current credit score is bad and your rates too high to handle, use those past tax returns as a way to prove your financial stability (especially if the debt is a result of new issues). Put as many years of past tax records on the bank’s table as you can and use them to prove that you’re not a risk. Many people find that this helps them lower their mortgage rates up to 25%! It can also work with other sorts of debt, so get creative. There are few areas where more data can possibly hurt you.
- By giving you budgeting advice. Your past years taxes are a great guide for how you’ve been spending your money–and ways you can improve. You can look at your deductions and see what expenses have been useful and what have hurt you. You can see how much you used to make and if that’s above the level of inflation. You can see how much you invest and figure out if you’re paying too much in taxes. You can also use those past years taxes to figure out how much you’ve made and spent in your entire life–one of the key calculations for figure out your real hourly wage and how to get your life on track.
Of course, these are just a few of the ways that past years taxes can help you out! For something that we loathe doing, those past tax records are incredibly useful documents. So be careful not to shred them and always save a copy of your tax returns. You never know when it’s going to save you money.