Well, recently I posted about the fact that I owe $6000 in taxes. That is still the case. I wish I could say that the amount of taxes I paid was less, but alas it was not. I had to come up with the full $6000. The issue of course becomes how would I able be able to secure the funds to do so. The increase tax amount was not unexpected. I incurred early withdrawal penalties from retirement accounts – which I was expecting. There are other reasons for the taxes being high but that was the main one. My main plan is to come up with the money included using about $4000 from my income, and then withdrawing $2000 from my dividend portfolio. Here’s how I actually was able to come up with the money to pay my taxes.
The Good News
To my pleasant surprise, I was able to use my income and some non-emergency savings I had to come up with the full $6000! The point is that I didn’t have to sell any of my stocks! So, my dividend portfolio is intact.
Furthermore, I was still in a position to start my savings for the slow season. This amount is a minimum of $1250 per month for one of my condos. So, it’s a nice surprise to say that I had more money than I realize.
Truthfully, the answer lies in my other investments. I receive income from several sources, including a couple of properties that have long term tenants. Because the interest rates on those properties are super low (2.5% and 3.0% respectively), they bring in positive cashflow every month. Now, I do have to be careful to ensure that I have funds to handle any maintenance that come up, but I am grateful to have these properties bring in income every month.
Additionally, we have entered the busy season, and so far, my two beachfront condos, which are short-term rentals, are paying for themselves. Although there is still room in my calendar for the busiest month (July), I expect that will change as the weeks go by.
Ordinarily, during the slow months, I contribute money from my personal account to help maintain the beach condos. That money can now be diverted to help pay for my high $20k credit card debt, and help me save money for the slow season.
Final Thoughts
I am encouraged. My tax bill was the last major financial hurdle holding me back. Technically, my credit card debt is the last financial hurdle. But, given the timing of tax season which combines nicely with the busy season, I can now start truly focusing on paying down that credit card debt, at least for the next few months.
Once we get into the slow season, I will likely have to go back to maintaining the status quo with the credit card debt. But, hopefully by that time, the balance will have been cut into half or so. Thus, the interest rate I am paying would be significantly reduced.
I can’t wait to post my debt payoff progress in future reports. So stay tuned.
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