I began this debt blog, which I called Debt Reduction Formula, in September of 2007.

That happened to be the same month I sold my home in Highlands Ranch, Colorado, and moved into a rental home in Parker, Colorado.

At the time, I owed $75,286.38 in debt. I was really feeling the pressure of the debt I owed and felt I needed to do something proactive to get it under control.

So I started this blog.

I proceeded to pay down my debt consistently, reporting on my progress each month.

From September 2007 until May 2009, I reduced my debt by $45,192 — a 60% reduction in 18 months. In May 2009, I predicted that I might be out of debt by early 2010.

My prediction has not come true.

I’m still in debt, and the amount I owe today in September of 2011 is actually more than what I owed in May 2009. As of today, I owe $39,289.89 — about $9K more than I owed two years ago. (This figure includes my car debts. I still have no mortgage.)

This is a little bit embarrassing to admit because I really thought I would’ve done better. But I haven’t.

You see, in 2010, I shifted my focus from paying off debt to growing my business, raising my three kids, moving my family to another rental, and various other things. I stopped publishing my monthly debt update. In fact, I stopped tracking my debt altogether.

As a result, my debt has bounced up and down and ultimately increased.

Which brings me to the primary point of this article: Tracking and reporting how much you owe on a public debt blog keeps you focused on becoming debt free… and… actually helps to reduce debt. My results from September 2007 through May 2009 are proof of that.

But without the accountability that a debt blog provides, it’s quite easy to slip back into old habits. And even if you don’t slip back into old habits, it’s still easy to grow complacent and simply lose track of your debt.

When it comes to debt, a little bit here and a little bit there can add up to a whole lot.

Today, I finally updated my outstanding debt and was shocked to discover that I had not updated my spreadsheet in 13 months. And so I’ve realized that I need to continue updating this debt blog to continue my journey to become debt free.

And that’s what I plan to do.

By the way, here’s the latest spreadsheet with balances I’m carrying. My debt in August 2010 was $25,460.82. I bought a second vehicle in October 2010, which is why there is a substantial increase from then until now.

Outstanding Debt as of September 14, 2011

This past fall, my mom decided to sell her 2006 Honda Pilot and upgrade to a new Pilot. My wife and I had been getting by with just our van for a few months, but we were ready to have a second car again.

So: Rather than go car shopping, we decided to buy my mom’s used Pilot. It had relatively low miles and was still in good condition. Plus, my mom was willing to give us a good price.

I called up USAA because they offer really good rates on car loans. I was already pre-approved, so the car loan was processed quickly. Of course, I had to decide how much of the car I wanted to finance, as well as if I wanted extra to cover the sales tax.

I casually decided to add an extra $500 onto the loan amount to cover the tax I expected I would have to pay. What I didn’t count on was how high the sales tax would be.

(Just a side note, for those purchasing brand new cars, the sales tax is usually deductible. Keep that in mind when it comes time to file taxes as it could save you a bundle. However, tax implications can vary state to state, so check online or with a professional to see what you do and do not qualify for.)

When I went to the DMV to pay the taxes and get my license plates, I discovered that the sales tax was nearly three times what I had budgeted! Talk about a shocker.

For the record, I live in Parker, Colorado, which has a sales tax rate of 8.1%. A used car purchase of $17,500 generates a tax of $1,417.50. Yikes!

In hindsight, I should have listened to that little voice in the back of my head that said, “Ryan, you should probably check the sales tax rate to see how much it’s going to cost you.” If I had done that in advance, it might have changed my decision to buy the car and/or changed the amount of the loan I got.

Unfortunately, I didn’t do this. End result: I had to pay for a portion of the taxes with a credit card just to get my plates. (This is one of the “two steps back” I alluded to in Getting Out of Debt Not Always Straightforward.)

Either way, if you are buying a used car and financing it through a bank or other lending institution, I strongly recommend you find out what your sales tax rate is first. Depending on your city, you may owe a much bigger chunk of money than you expected.

And if you’re thinking of buying a used car and also planning to move in the near future, you might consider two things:

• Move to a place that has a lower sales tax rate.
• Postpone your car purchase until after you have moved.

Getting out of debt is not always a straightforward process, especially if you’re self-employed like I am.

Last year, I made some business investments that didn’t pay off quite as well as I wanted. As a result, I had to tap my line of credit in late fall and again in January to pay taxes.

With a job, you have predictable income. But in business, cash flow can often be erratic and unpredictable.

The income inconsistencies in business can make getting out of debt a bit more of a challenge. At least, that has been my experience the last couple years.

I’ve taken a lot of steps forward, and a few steps back. The good news is I’m still moving in the right direction… even if I have a bad month or two. I’m aware of what’s happening and know what I need to do to keep moving ahead.

I share all this with you so that you don’t get overly discouraged if your journey out of debt isn’t as straightforward as you thought it would be.

Just keep your eye on the prize (being debt free) and keep doing what’s necessary to get there.

And don’t let a bad month or two derail you. You can do this.

If you’re burdened with your unpaid bills and want to get out of financial trouble, you may opt for debt consolidation programs. With the help of these programs you can simplify your debts and become debt free.

Debt consolidation programs

A debt consolidation program combines all your multiple debts into a single one. Whether or not you will be eligible for the program will depend upon several factors, like, your credit report, amount of debt you owe, your current income, etc.

All your unsecured debts will be consolidated into a single one. You may have to take a new loan for this, at a lower interest rate. It will be easier for you to make a single payment towards the new loan, instead of paying multiple creditors.

You may take a home equity loan or a new debt consolidation loan to consolidate your multiple debts into a new one. If you take a new loan you may have to use your home or car as collateral.

You will need to negotiate with your creditors to consolidate your unpaid debts, with a new loan at a lower interest rate. You may do this negotiation on your own or get the help of third-party professionals to find out the most suitable consolidation program for you and do the negotiation, on your behalf.

Benefits of a consolidation program

A consolidation program has several benefits which are mentioned below:

• Single payment: This program helps you to make a repayment plan according to how much you can afford. Once your creditors approve the plan, you have to make a single monthly payment to pay off your debt.

• Counseling: If you opt for a consolidation program with a consolidation company, they will do counseling with you to help you realize your financial goals.

• Negotiation with creditors: The consolidation company also negotiates with your creditors, on your behalf, to lower your interest rate and waive off your fees towards late payments.

• Less time: If you opt for a consolidation program, you may get rid off your debts in 4 to 6 years. Thus, in a very short time you will be able to attain freedom from debt.

Debt consolidation programs are beneficial for you if it really helps you to get rid off your debts in a shorter time. With the help of this program you can also pay less than the amount you actually owed. However, you need to be aware of the fraudulent companies and avoid those.

How to avoid fraudulent companies

To avoid scam companies, you need to find the reliable and authentic companies, based on the following factors:

• Proper license holder: Every state has its own list of license-holder companies. Prior to enrolling for a consolidation program with a company, you should make sure that it has a valid license. You can get the list of license-holder companies from the office of the attorney general.

• BBB rating: Every registered company receives a grade from the Better Business Bureau. You can see the rating of the company to know about its credibility.

• FTC: The Federal Trade Commission has a list of companies against which the customers have lodged any sort of complaint. Before selecting a company you can check with the FTC list and find out whether or not the company is reliable.

• Consult with relief networks: You can take help of people associated with relief networks. It has experienced people concerned with debt, so you will get authentic advice/suggestions on the program you may want to opt for.

If you want to opt for debt consolidation programs, you should choose reliable and authentic agencies. You can get list of authorized agencies from the Yellow Pages or from the Internet. You can also get references from friends and neighbors.

Before finalizing with an agency you should make sure that it has legal accreditations so you do not fall prey to a scam and lose your hard-earned money.

About the Author: Jason Holmes is a regular writer with Debt Consolidation Care and is also a contributor to other financial sites. His expertise is woven around various aspects of the debt industry and with his e-books he tries to impart to people the different situations and simple solutions to get out of difficult situations. Some of his works include e-books like Credit Score: The Quintessential Therapy for a Happy Pocket, Take Creditors and Collection Agencies to Small Claims Court, and My Story- From Depression to a Smile.

Tax debt relief is rare, but is sometimes awarded to individuals who’ve overextended themselves and are unable to pay their taxes by the time they are due.

Unfortunately, getting Uncle Sam to cut you a break is not easy. That’s because all the laws are written to favor the federal government.

Sure, the government provides bankruptcy laws. But going through bankruptcy does NOT discharge your tax obligations!

In other words, the government will forgive your debts to others, but will not forgive the tax debts you owe to them.

If you think this is a hypocritical double-standard, you’d be right. Nevertheless, it’s just the way it is, and we have to play by the rules our legislators make.

Tax Installment Plan

The most common kind of relief the government will offer you is some kind of installment plan. They may allow you to make four or five equal payments over four or five months. Or they may spread out your payments over 60 months.

Every situation is unique. Different terms are offered to different people.

If you have a huge tax obligation, an installment plan will at least break down the payments so they are somewhat more manageable (although certainly no less painful).

Offer in Compromise

Although it is extremely rare, the IRS may offer you what’s called an Offer in Compromise. This is basically the same thing as settling a debt.

If you owed $20,000, the IRS may evaluate your situation and decide you will never be able to repay that tax debt. And so they may allow you to make a single lump sum payment for less than what you owe.

By making this reduced lump sum payment, the IRS then agrees to wipe out the entire tax debt.

In a perfect world, an Offer in Compromise would be more common. But the federal government is quite greedy, so this kind of settlement is very rare.

How to Seek Tax Debt Relief

Anytime you face a tax obligation that you cannot pay, then your best course of action is to contact the IRS and talk to somebody. Do not try to hide from the IRS; be transparent with them.

Many times you will be able to negotiate some kind of installment plan. In fact, there are four different kinds of installment plans depending on how much you owe and your past history of filing your taxes.

You can find out what you qualify for by searching the IRS web site or calling an IRS agent directly.

If you are facing a genuine hardship involving a disabled child or insurmountable medical bills, the IRS may be willing to forgive a portion of your debt through an Offer in Compromise.

But in order to see if you qualify for such an offer, the IRS would need to thoroughly evaluate your financial situation.

Remember: Tax debt relief comes in many forms. Don’t procrastinate and try to hide from the IRS. Call them and work something out. You will feel less stress and you’ll be happier when you resolve your tax debt as quickly as possible.