Debt forgiveness: blessing or curse?
All this talk about our government discussing student loan debt forgiveness is really getting under my skin…for a lot of reasons. It makes me seethe to hear our “leaders” in Washington talk about devastating student loan debt, while still offering new loans. I also believe the focus should be on helping people find ways to pay what they owe, instead of bailing them out at taxpayers’ expense. We are not helpless and there are solutions. Let’s empower those who need help; by teaching them how to help themselves.
Instead, there’s talk of debt “forgiveness.” But they’re only talking about one side of it – focusing on how many are hurting because of this heavy debt burden. That’s true, many are hurting and I feel for them. But what are these people, who can’t afford to pay the debt, going to do when they find out the “forgiven” amount is taxable?
That’s right, if your student loan debt (or any other debt, for that matter) is forgiven, it is seen as taxable income. This means that if your taxable income for the year was $20,000 but your student loan debt of $60,000 was forgiven, your taxable income is now $80,000 which puts you in a higher tax bracket.
Don’t believe me? Look it up: https://www.irs.gov/newsroom/what-if-my-debt-is-forgiven
Can you afford to pay the taxes for a debt you couldn’t afford to pay?
Let’s focus on how we can help ourselves, instead of waiting for the government to bail us out – which comes at a hefty price for everyone!
For those trapped under a mound of student loan debt, please seek help in paying it off. You can find endless ideas for paying off debt online and in books. Read my blog post, “6 Steps to Slay Your Debt” or visit my YouTube channel if you want to hear my ideas. Or, schedule a free appointment with me and let’s brainstorm.
For those who are considering student loan debt, READ THE FINE PRINT BEFORE YOU SIGN ON THE DOTTED LINE! As with anything else, it’s not the tool, but how you use it. I’m not in favor of student loans. I believe you can sidestep them completely, given the right planning. Listen to my interview with Anthony O’Neal, Author of “Debt-Free Degree” for a ton of great ideas! But if you’re going to take a student loan, educate yourself first – and don’t say you didn’t know! Plan how to get out of it, before you ever get into it. Knowledge is power!
Agree? Disagree? Email me! Bobbi@centsablechat.com