Every year, millions Americans literally throw out hundreds–potentially thousands–of dollars. This is because every year during spring cleaning, people toss out their past tax records. These records can be worth their weight in gold.
Savvy negotiators have used their past tax records to save 5%, 10%, even 25% on everything from mortgages to business loans to buying a new car. And you can to. Here’s how, in 3 easy steps:
- Save your past tax records for five years. Most people recommend keeping your financial information for only three years, but I disagree. I think keeping it five years allows you to be selective about which income years you can show. If you had one bad year 3 years ago, you can omit it as needed. Or, you can put it in the proper context, showing how consistent your income has been the rest of the time.
- Consider your debt. Past tax records are great tools, but they’re most effective when used with a savings plan. Spend some time thinking about your expenses, you debt, and where you can save money. Do you want a second mortgage on your house? Or to reduce the monthly payments you have now? Do you want a new car? Do you need to borrow money for a specialized degree? Your tax records can help you with all of these things, but have a plan or an idea first.
- Bring your past tax records with you to your negotiation. Your past tax records are there to show how reliable and unrisky you are, no matter what your credit record may show. They can’t overcome a poor credit rating, but with a middling one or a great one they can help convince people to slash your costs up to 25%! Since you have a plan in action, go into the meeting feeling confident. Even if you do have some risk, your records show a consistent ability to make money and steady payments, and that’s extremely valuable information for any lender.
Using past tax records to negotiate savings really is that simple. Not only are they useful for people who want to show a better financial record, they are great for people who have almost no credit associated with their name because they’ve never taken out a loan. So students, hang on to those taxes! They might just help you buy your first house.