Many credit counseling groups claim they are in it just to help you and not make a profit as indicated by their charitable organization status. The IRS is not happy.
IRS Crushes Credit Counseling Groups Claiming Non-Profit Status
For the last five years, the IRS has been taking a much closer look at businesses claiming to be non-profit organizations. Given the reduction of tax loopholes over the years, the agency has taken note of the fact that many high-end tax strategies now involve some kind of charitable organization. In performing the analysis, the IRS has found no worse a collection of abusive businesses than the credit counseling industry.
Beginning in 2004, the IRS audited 63 credit counseling groups claiming non-profit status. These “charitable organizations” receive over fifty percent of all the revenues in the credit counseling industry, to wit, we are talking a major audit initiative. Well, guess what the IRS found?
To date, the IRS has completed 41 of the audits. Of these 41 audits, every single credit counseling business has had their non-profit status revoked, proposed for revocation or outright termination. Yes, every single entity has bitten the dust! Can anyone think of a bigger scam?
In crushing these bad apples, the IRS found a couple of amazing things. The primary reason for revocation was the groups provided insufficient public benefit. They offered little or no counseling or education to individuals. Instead, they were primarily motivated by profit according to the IRS. To top things off, the IRS found most of the businesses had “unique” dealings with for profit companies that just happened to be owned by the same interested parties. Imagine that! Shocking, I tell you.
It must be admitted that these rotten apples only represent roughly forty to fifty percent of the credit counseling industry. The rest of the industry that has not been audited might be entirely legitimate. The IRS does not seem to think so. In fact, it has sent out audit notices to every single company that has not yet been audited. I suspect the blood bath is just going to get worse.
In truth, not all credit counseling agencies are dubiously claiming non-profit status. The IRS, in fact, has noted it approved a whopping three applications for non-profit status out of 100 since 2003! Unfortunately, the IRS hasn’t indicated the identity of the three.
Does living cheap mean being miserable, or giving up what you want? Not at all. In my own case, it meant getting the things I really wanted. Spend less on each thing or activity, and you can have more of them, right? The key is to spend less and still get what you need and want. I'll tell you how I managed it.
Living Cheap - Housing
The first house I owned was a mobile home on a small lot. I paid less than $20,000, and had payments of $257 per month. With taxes, insurance and repairs, it still cost less than rent. With three bedrooms, an expanded living room, and a nice fenced-in yard, it was very comfortable. Eventually I sold it for $45,000.
Two things that I did made it even cheaper. First, I paid down the mortgage as much as I could when I was working. Within five years I owed nothing, and from that point on it cost an average of $300 per month to pay for the utilities, phone, garbage collection, taxes, insurance, and repairs. This is living cheap.
It became even cheaper when I found that I could easily rent the other two bedrooms. I got $65 per week for one, and $75 or more per week for the other, and I included all utilities. I found decent young guys to rent to, and the rents added up to $600 per month, making this more than cheap living, and even better than free housing. I was making $300 per month AND living for free.
Living Cheap - Think And Plan
With lower expenses I could work less, so I could get by without a car. This saved even more money. An occasional bus fare, and the used bicycle I bought didn't add up to a fourth of what it cost to have a car. I needed to plan my trips around town a little better, but it was worth it.
Until I was almost 40, I never paid more than $40 for a piece of furniture. You have to know what is important to you. I DID pay $220 for a high-tech sleeping bag, because ultralight backpacking was important to me. On the other hand, since I couldn't tell the difference between a nice, clean used couch for $30 and one that cost $900, I bought the former.
I found that when I worked less, I had time to more carefully consider my options. Time can save a lot of money. I paid half of what others paid for groceries, and when I did get a car, I found a repossessed one worth much more than what I paid. When I went to Ecuador for a month, it cost $1,040, including airfare, hotels, meals, a guided climb up a 21,000-foot mountain - everything. It was possible because I had time to search for the deals.
I never cared much for jobs, and I worked only part-time for years. I played chess, wrote poetry, and read good books. I traveled several times a year. I met the love of my life in South America (happily married for almost 5 years now). This was all possible not because I made a lot of money, but because I spent less than I made, and used the difference for the things that mattered to me.
This article isn't meant as a how-to guide. I explain how I traveled and bought things so cheaply in many other articles. This is simply to get you thinking about the possibilities, and to point out some principles. What are the principles? Find ways to pay less without getting less. Don't buy things you don't need. Spend a less time working and more time thinking. Stay out of debt. Finally, know what is truly important to you, because this is what you can have more of by living cheap.