The reason why my student loan debt hasn’t dropped to a greater extent is simple – the United States government demanded my money. That’s right. Remember the $3,690 that I paid to the Internal Revenue Service a few months ago? That’s the explanation of why my student loan debt hasn’t dropped more than $1 thousand in the last month and a half. The government demanded my money and – like any good citizen – I had no choice but to pay.

One could argue that the several thousand dollars that I put down on my new car could have also gone towards reducing my total student loan debt. The difference between the money I owed to the IRS and this down payment, though, is that I had been budgeting to buy a new car so the money for the down payment was available. On the other hand, the IRS tax liability was a very quick turnaround and required me to tap into my savings account. Sure, I’ve got more than enough savings to take care of the tax liability, but I’m anal about my savings account and investments so I really hate tapping into them. I’ve been spending the last few months replenishing the money I had to withdraw for taxes (as well as my regular deposits into the savings account). That’s what happens when the IRS rapes depletes your free cash flow.

If I didn’t need a new car and the IRS wasn’t greedy for this working man’s money, my total amount of student loan debt outstanding today would not be $28 thousand. Instead it would be $18 thousand. In fact, I’d be less than 12 months away from totally eliminating the student loan debt once and for all.

But the government called and my car failed. Your classic one-two punch.

Bastards.

In other words, I did pretty well in 2010 so I had to pay extra money to the government for doing so well. To put it simply, free tax filing sounds good right about now. In total, I paid $3,564 to the Internal Revenue Service and another $374 to the great State of New Jersey.

"You can pay me now or you will pay me later." - Irwin R. Schyster

Oh, you might remember that I used a picture of former WWE wrestler Irwin R. Schyster in last year’s post. Well, I thought that the picture worked pretty well and was entertaining, so considering that I just uploaded a post that talked about WWE bringing WrestleMania to New Jersey, I figured that it would be great to bring back Mr. Schyster for this year’s tax news. And speaking of this year’s tax news…

I owe both the Internal Revenue Service and the State of New Jersey taxes again for 2011.

You can go back and read last year’s entry to find out all of the different places where I draw income from (including advertising revenues related to this blog). You can also go back and read last year’s entry to find out some of the different side jobs that I perform each year (adjunct teaching, for example). However, I want to reiterate a point that I made last year: generally speaking, I want to pay these taxes.

There are a lot of people who spend a lot of time trying to find ways to not pay the government according to the tax laws on the books. Unless you’ve got big-time scratch (and I do not), then it makes no sense to go out of your way to hide income or gains from the government. They’ll find out and they’ll nail you for it – so pay your damn taxes. The reason why I’m generally okay with paying these extra taxes is because I made a good amount of money last year.

I mean it’s simple enough, right? You make more money than you pay taxes on so you have to pay taxes on that excess income. Generally speaking, what’s the problem with that? Sure, we can get into a discussion about whether or not I should be taxed at the rate that I’m currently taxed at (I would suggest that I should be taxed at a lower rate). And yes, we can get into a discussion about whether the government uses my tax dollars according to my will or in a manner that I find efficient (the answer is “no” for both of those items), but that’s not the point of this entry. The point is that you should all want to pay more in taxes because if you have to pay more in taxes, then you must have earned more in income during the previous year. Let me repeat that:

The more taxes you pay, the more money you earned.

Keywords: “more,” “money,” and “earned.”

While I think that it sucks and I might be annoyed that I have to send a check to the Internal Revenue Service for some $3,200+ and to the State of New Jersey for some $450+, I’m glad that I worked hard enough and earned enough money to increase my tax liability. Although I do have a bone to pick with the IRS over one aspect of my taxes (the student loan interest deduction), but I’ll get to that in an entry to be posted in the next few days). Also, this year I was better prepared for a higher tax liability because of being so shocked that I owed money last year. So I’m prepared to pay the government this year with very little impact on my regular cash flow.

And that’s a good thing… because nobody wants to open their door and find Irwin R. Schyster waiting on their doorstep looking for a check. No thanks!

Where the student loan burdened crybabies and occupiers failed, I succeeded.

When 2011 began I had $54,385.85 in total student loan debt remaining payable to the United States Department of Education. When 2011 ended I had $34,911.14 in total student loan debt remaining (still payable to the USED). The reason why I share these numbers is because I want people out there with incredible amounts of student loan debt to know that you can defeat your debt and you can do it without the dream job or the six figure salary. You can defeat the debt by working hard and giving up many of the luxuries of life until you can afford them.

I’m not going to recount my point of view on these topics because I’ve done so over and over again in 2011 (and prior years). However, what I thought would be helpful is if I put together a brief list of links to other student loan entries from 2011 that focus on certain topics related to repaying student loan debt.

• January 2011: The Year Begins
• April 2011: Repaying Student Loans Versus Spending Money on Other Stuff
• May 2011: Quoted in USA Today – Again!
• August 2011: Responding to Dumb Comments
• August 2011: Pondering Post-Repayment Financial Goals
• October 2011: Thoughts on the Movement to Forgive Student Loans
• December 2011: The Power of Focus, Research, and Action

Personally, I think that the last entry linked above is a really good one. If you have a few minutes and you haven’t read that one yet, then I recommend giving it a go. Here are some other interesting tidbits regarding the repayment of my student loans in 2011…

• Daily Interest. When 2011 began I was accruing $6.71 every day in interest alone. Today, my student loans accrue $4.30 in interest on a daily basis. It’s not great, but I’ll take a $2.41 reduction in interest accruing everyday! Over the course of a year, that’s $879.65 saved in interest alone. Still think that it’s not worth it to drastically overpay your monthly bills?
• Principal Repaid. In 2011, I repaid a total of $19,474.71 in principal.
• Interest Repaid. In 2011, I paid a total of $2,133.68 in interest. Also, because the tax code is written to reward lazy people with a redistribution of wealth from those of us who work their asses off (i.e. people who aren’t rich, but still work like crazy to earn enough money to repay their debts), I won’t be able to count the full $2,133.68 as a tax deduction. Why? Simple – I worked too hard in 2011 and earned too much money so my eligibility to count the $2,133.68 as a tax deduction is nullified. Think about that – I worked extra hard to earn extra money that I did NOT keep or stick into an account somewhere. Instead, sent that money to the government to repay this loan and that same government is going to penalize me for that hard work in repaying their loan by not allowing me to count the $2,133.68 as a tax deduction. Now tell me how this government is working in the best interests of the hardworking middle class again???

Look folks – either you get busy repaying your debts or you get busy occupying public space and/or crying and whining about something that only you can really change. Getting busy repaying your debts works – my experience proves that time and time again. Bitching and moaning about how your debt is someone else’s problem isn’t going to get you anywhere – the public displays of childishness proved that throughout the latter half of 2011.

Here’s to pushing harder than ever to have my student loans totally repaid by the end of 2012!

And it’s simple, really – in fact, I already wrote about it on this blog. You’ll remember at the end of February when I wrote about the fact that I’m going to owe taxes this April 15th. Hey, it is what it is, you know? And while I’ve been able to reduce my total taxes owed by about two hundred bucks (I forgot that last year I opted to not receive a portion of my state refund because I figured that this was coming), I still owe a lot of money in taxes this year.

A few weeks ago I received a really nice check for teaching at the all-online college. It was the type of check that if I didn’t have this level of student loan debt, I would probably take half of it and put it away in a savings account and then use the other half to update my wardrobe and spend a weekend away on vacation somewhere. However, I have student loan debt so whenever I come into a financial windfall the first thing that goes through my mind is, “Oh wow! I can pay down a lot of student loan debt with this money!”

Some might consider that pathetic, but when you’re stifled with student loan debt you just want to get rid of it as soon as possible.

However, when I received that nice check for the online teaching, I couldn’t even be excited about it. Why? Well, I received that check and immediately knew that all of it would be wasted on the government because I owed just about as much as that check was worth in taxes this year. Let me tell you – that’s a shitty feeling. It’s a shitty feeling knowing that these several thousand dollars that I really should be using to pay down this student loan debt is going to, instead, be wasted on bullshit government programs or inconsiderate assholes who are milking the system (and don’t cry me a river about all of the people who need the government subsidies because I see the assholes who milk the system on a daily basis in the Neptune/Asbury Park/Eatontown area of Monmouth County).

It sucks.

So while these debt reductions have been good and I’m proud of reducing my student loan debt, I should be paying down even more than I can write about here. Unfortunately, the government has managed to get in the way.

And it really sucks.

Alright, so WWE alumnus Irwin R. Schyster isn't actually getting my money, but you get the point!

According to the tax software, I owe the great State of New Jersey $525 while I owe the IRS some $3,686. In total, I owe $4,211 in additional taxes for last year. Sure, I have a few more reviews to make on the various tax forms (my taxes are really complicated – see the next paragraph), but I don’t think that these numbers are changing too much.

The reason why my taxes are increasingly complicated is because of all of the stuff that I “do.” In fact, if you’ve been reading this blog for a while then you know that I bitch every once in a while about being too busy. Well, that hectic schedule carries over a similar craziness when it comes time to do my taxes. You see, I get some W-2 forms (my day job and teaching at the local college), a bunch of 1099-MISC forms (teaching at the online college, a few for certain types of income earned from Usable Web Solutions, etc), a 1098-T form for the classes that I was able to take for free last year at the local college, two different student loan interest deduction forms (one from the USDOE and one from NJHESAA), a Schedule C for my website company, a Schedule C for the other small business that I started for the online teaching and grant writing, a 1099-B for proceeds from stock sales, etc, etc. It gets ridiculous after a while.

If I didn’t have such a good handle on all of this stuff (I think), then I’d seriously consider getting myself an accountant to do this work for me. But I think I have a good grasp on what’s going on with my funds, so I’m confident in this return. But to get back to the point…

I already pay my taxes. Just like the rest of the working world, my company deducts my tax obligation through my paycheck and – just like the rest of the working world – I get sick at how much money gets taken out of my paycheck for taxes each pay period. However, I’m fine with paying an additional $4,211 in taxes for last year. Why? It’s simple, really.

I made a good amount of money last year.

Look, folks – I’m not writing this entry to brag or toot my own horn or anything because I’m not bringing in the big bucks by any means. However, think about what you’ve read on this blog for the last year or two: I work at a day job, I’m an Adjunct Professor at the local college, I’m an online instructor at a very well-known online college, I’ve owned a successful and profitable small business for 5 years, and I contract for some low-level consulting and grant writing jobs for local nonprofit organizations. I work like a madman! And, obviously, one of the end results of that type of work schedule should be an increase in a guy’s annual income and, thankfully, that’s how it worked out for me last year.

I WANT To Pay These Taxes
But the reason why I wanted to share the fact that I’m paying a lot of taxes for last year’s income is because I want to pay these taxes. That’s right – I want this additional tax liability which is over and above the taxes that I already paid last year. Why do I want this increased liability? Because when you pay more in taxes, it means that you’re making more money and everyone should want to increase their annual income. Of course, most folks won’t have a convoluted tax return like I have where certain revenue streams deduct federal income taxes and others don’t, but just remember the lesson here: the more money you make, the more money you’re going to owe.

It’s okay to owe a few tax dollars at the end of the year – it means that your income is going in the right direction. Good luck on your tax returns this year, everyone!

For example, aside from throwing out a lot of garbage that was accumulating in the car, I was able to take some t-shirts that I had been piling up in the trunk. The t-shirts were piling up there because I honestly had no where else to put them! Anyway, as I write this post the t-shirts are all out of the dryer after having been washed earlier today. Some of them are on the “charity” pile and some other ones are on the “keep these” pile. By the way, the “charity” pile of clothes is getting bigger and bigger!

Professionally, I’ve advanced nearly every deal that I’m working on which is definitely a function of the fact that this week is spring break for my undergraduate students and thus they aren’t around for me to have to teach.

I’ve been moving a bunch of my online projects forward, which I’m always happy about. As a part of this process, I’ve been able to detach some folks from Usable Web Solutions, LLC (i.e. let them know that they need to find a new “web guy”) and I’ve been able to send payment letters to other clients.

On a more personal level, I ran out of one of my prescriptions the other day and I managed to get it refilled (even though there were no more refills left) through the services offered by my pharmacy. This was a much easier process than I imagined it would be and I’m extremely happy that this worked out so easily. You know how much of a pain in the ass it can be to work around the pharmacy and the doctor’s office beating each other up… No thank you.

Oh, and after my car had the windshield replaced earlier today, I took it over to the inspection station and it passed inspection. So… I won’t be going back there for at least two more years, thankfully!

I also spent some time today doing some short-term (two month) financial planning to address some upcoming expenses that I have to deal with. Among these expenses are paying for the windshield replacement, paying for a flight to Nashville in April, and paying for my 2010 membership to the local CSA farm. By my calculations, I’ll be able to continue my $1,000+ biweekly payments on my one student loan and pay for all of these other items in full by April 15th.

And speaking of April 15th, I spent a few minutes today finalizing my taxes so I think that they’re ready to finally send into the IRS. I should be getting a decent return back this year, although still below what H&R Block suggests are the averages for people of my age and income level (not fair!).

As you can see, I’ve been pretty busy. However, before this coming Monday hits, I have to complete a grant application for a client that I’m working with on the side; begin, write, edit, and finalize a 10 page paper and presentation package for the class that I’m taking; prepare lesson plans for my class for the coming week; go to Pennsylvania for a wake this weekend; and review some material for the foundation where I serve as a Trustee.

All in a weekend’s work!

The biggest pain in the ass in the next few days will be going to the doctor this Friday. The doctor is going to be upset with me because I was supposed to lose ten pounds since the last time I saw him (early November 2009) and, instead, I think that I’ll either break even or maybe gain 3 – 5 pounds. Not good. However, I don’t have too much time to worry about that until after next Monday – which is good since that’s probably when my blood test results will be coming in.

Lots to do in the next few days. Don’t be surprised if I miss a day here and there updating the blog. Thanks!

What is a consumption tax? It means that everything a person purchases is taxed at between 22% and 23%. But wait! That’s the only tax that anyone ever has to pay – ever. No income taxes, no business taxes, no capital gains taxes – nothing. You name a tax other than a consumption tax and it doesn’t exist. Another thing to keep in mind is that the tax is only assessed once. For example, if you buy a brand new car, you pay the tax. However, if you buy a used car – no tax. The Fair Tax is only assessed once.

The other critical point to remember under the Fair Tax is that each household in America would be reimbursed on a monthly basis for a dollar amount equal to what they would spend on basic goods. This immediately removes the argument that poorer citizens would be facing an undue burden under the Fair Tax. They wouldn’t be facing that burden because the government would provide each American household with a subsidy equal to what they would typically spend each month on consumption taxes for basic necessities.

There is obviously too much to go into in this small space. However, if you are interested in government reform or new ways for America to meet its obligations to its citizens, then I would recommend reading this book. I was completely against a Fair Tax when I first picked up this book, but after reading it I am convinced that it could be a great step forward for America in the new world economy.

“Starting in January of 2010, some students will be able to electronically pre-populate the FAFSA with their own IRS data. The Institute for College Access & Success has long advocated for this practical approach to simplification, which will make the aid application process easier, more accurate, and more secure.

“Students are not the only ones who will benefit from simplification. Colleges currently spend an estimated $432 million a year verifying the information on completed FAFSAs, including collecting and combing through hard copies of applicants’ tax forms. With IRS pre-population, financial aid offices could spend more time working directly with students and families.

I think that it’s a pretty good decision to link already processed tax forms with the FAFSA. Sure, there is an element of “big brother” involved with this type of commingling of information, but I wonder how deep that really goes in reality. Plus, as the quote above suggests, there is a gigantic waste of money involved with processing the FAFSA.

This is good news for federal student loan borrowers and a general step in the right direction!

1. What is the Public Service Loan Forgiveness Program?
The Public Service Loan Forgiveness Program is intended to encourage individuals to enter and continue in full-time public service employment by forgiving the remaining balance of their eligible federal loans after they satisfy the Program’s public service and loan repayment requirements. Those individuals with certain federal student loans for college (Federal Eligible Direct Loans) may qualify to have the outstanding principal balance and accrued interest cancelled under the following conditions: (a) the borrower makes 120 monthly payments on the loan after October 1, 2007; (b) the borrower is employed by a “public service organization” at the time that loan forgiveness is requested and granted, as well as during the period the borrower makes the required 120 monthly payments; and (c) the loan is not in default at the time of the request.

“Federal Eligible Direct Loans” is defined to mean a Direct Subsidized Loan, a Direct Unsubsidized Loan, Direct PLUS loan, or a Direct Consolidation Loan. Your loan documentation should identify the type of federal loan you have.

2. What is a “public service organization?”
Public service organizations include full-time jobs at a nonprofit that is a Section 501(c)(3) organization under the Internal Revenue Code. Other public service organizations include federal, state, local or tribal governments, agencies or entities; public child or family service agencies; Tribal colleges or universities; and private organizations that provide public services like emergency management, public safety, public interest law service, public care for children, elders or disabled, or public health, education or library services.*

3. When and how can I start counting my ten years?
The Program applies to payments made after October 1, 2007. Every month you work at a public service organization and make your loan payment on time counts towards the necessary 120 payments. Your service does not have to be consecutive however (e.g., if you worked for a nonprofit for a year, then a business for a year, and then again at a nonprofit, you just starting counting payments where you left off).

4. Do I have to keep working in the same public service job?
No. For a payment to count towards the forgiveness period, the borrower has to have been employed full-time by a public service organization when the payment was made. As noted, there are many types of public service organizations.

5. What does it mean to work full time?
“Full-time” means working in one or more public service jobs for the greater of: (a) an annual average of at least 30 hours per week, or for a contractual or employment period of at least 8 months, an average of 30 hours per week; or (b) the number of hours the employer considers full-time.

6. What if I am a teacher?
For borrowers with a contractual or employment period of less than 12 months, qualifying payments have to be made each month for all 12 months. Teachers who work on an academic year basis, often for only nine months in a year, would still be required to make payments on their loans during the summer vacation period.

7. What if I was/am an AmeriCorps or Peace Corps volunteer?
Full-time service in an AmeriCorps or Peace Corps position counts as employment in a public service job. AmeriCorps Segal Education Awards or Peace Corps transition payments used for loan repayment may qualify to meet the 120-payment requirement.

8. How do I keep track of this?
It is the borrower’s responsibility to collect and retain the documents that support eligibility for this benefit.

9. Does this just apply to loans taken by the student, or does it also apply to the loans a student’s parent(s) have taken?
For the most part, this just applies to eligible loans the student has taken directly. Parents with outstanding loans would need to contact the Department of Education to learn the conditions under which part of their loans could be forgiven.

10. What if I have further questions?
For further information on the Public Service Loan Forgiveness Program, contact Nikki Harris at the Department of Education. Telephone: (202)219-7050. Internet: Nikki.Harris@ed.gov

*This last category of private organizations providing public services do not include the following: for profit organizations, labor unions, partisan political organizations, or religious organizations (unless the activities of the religious organization are unrelated to religious instruction, workshop or any form of proselytizing).

Disclaimer: The information in this courtesy fact sheet is provided for informational purposes only and is not a substitute for expert legal, tax, or other professional advice specific to an individual’s circumstances.

Again, this information comes from the National Council of Nonprofits and I trust in their review of this program. For those of us with tremendous student loan debt – be on the lookout for more information about this program. It could be big!