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Sunday, February 3, 2008

The Agony of Defeat...

Do you know who Vinko Bogataj is? He was a moderately successful ski jumper for Slovenia in the 1970's. But what he is known for in American is the start of abc's Wide World of Sports. He IS the picture of "The Agony of Defeat."

That is how I am feeling right now...

Just got the ultimate Ninja Bill. We are doing so well, but as I have said before that wasn't always the case. When we moved here in December of 2006 we had a bit of a perfect storm. We were moving, had to cash out all of my options at my old employer, and had a huge medical bill hanging over our head. With no credit left or available and trying to move into a new house, we had only one choice...to tap my 401K. It wasn't much cash, but even with the penalties it was enough to get us moved, into the house and get the bill killed and pay off some really high interest debt. Desperate times Desperate measures... (He's At the gate)

Well today, two days after I filed my taxes, guess what I got...My 1099-R for the withdrawal. I thought it was in my 2006 taxes and didn't even think about it...(He is sliding)

So now I have to file an amended return. The worse part is that I went from having a $5013 Federal Refund to Owing $255! My state return went up $166! So I am still getting money back, about $2400 in total, but all of the Sugarplums dancing in my head just went rancid!- (The agony of defeat indeed!)

We did have taxes pull from the distribution, but the issue was the penalty...Well, now we have to print off a ream of papers worth of returns and get them out. Also given the extra income we will lose some of the Tax Rebate this summer...As Dave Ramsey says, Stupid Tax!

Let this be a cautionary tale for all of you to mind your finances! Or you could have as expensive of a morning that I have...off to cry :(


Fiscal Musings said...

So sorry to hear about the new situation. At least you're more in control of things now though.

Deborah said...

Just found your blog. Good that your are making changes to your life.

Seems it was a good thing when I was a kid and I wanted felts pens that cost $2 and I got 10c allowance I was taught that I had to save for 10 weeks to buy them (and damn if they didn't get stolen the second day I had them...)

Ever considered an analysis of selling your place and going back to renting? Down sizing is an excellent way to gain control of finances. I just sold my place and monthly housing expenses when down by about $1100/month before savings from utilities are added in. Hot water is included in the rent, as is running the fireplace for heat. Our old place was costing us about $300/month for gas and electricity. I think it is about $100/month at the new place because it is smaller and the things included in the rent. And, it is closer to work, so another $50/month in gas is saved. There is no upside in owning right now, housing prices are likely to decline further.

RacerX said...

@ Fiscal - We are still getting money back, so it isn't tragic by a long ways, just disappointing.

@Deborah - Welcome! Glad you found us. Re: Selling the house, unfortunately it would be a "buy high sell low" sort of deal. The market is horrible and if we sold it, it would be at a loss. Not to mention moving costs. We can afford the house now that we are flowing a good path, and even though our payment will be higher when we refinance, we will have a good chunk of our debts paid off. Tax wise the house is a help too!

Thank you both for reading and Commenting!

Mrs. Micah said...

*hugs* That majorly sucks indeed. Taxes can be so frustrating. But this too shall pass. You're prepared to handle it, albeit not very happily.

RacerX said...

Thanks Mrs M! - We are OK, focusing on the positive. We are still getting money back and using it towards our goals, so not so bad.

Thanks for the encouragement!

Sharon said...

Ugh....I'm so sorry...that really must be disappointing. But the bright side is that you are still in the positive...You will still be able to put some money away...I've felt your pain, for sure, especially with this years taxes..Glad you found it now and not later where more penalties would be added, plus interest!

RacerX said...

Disappointing is the key word. But a great learning experience. Much happier to find it now then get a notice from the IRS!

Thanks for commenting!

CatherineL said...

That sucks. If it makes you feel better I owe the taxman a heap from my old business and I haven't earned a bean from the new one yet.

RacerX said...

Catherine - While misery loves company, I don't wish tax issues on anyone, especially you!

Hopefully you can work something out with the UK Tax agency and give your new business to be sucessful as I know it will be!

Anonymous said...

Ack, how frustrating! And... confusing. I did have to read it twice. :)

Sorry to hear about this. It really sucks when you've got it all figured out and then life turns around and smacks you upside the head.

But at least you've got a plan in place. That makes SUCH a huge difference. Good luck!

RacerX said...

I really isn't like we lost something, just that we thoufght we had something! It is a good lesson in two-fold for me:

- Don't count the chickens before they are hatched!
-Always have a plan!

Thanks for being a frequent visitor and commenter!

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