DAVE RAMSEY

Dave says: It really becomes about the lesser of the two evils

Apr 30, 2024, 1:00 PM

If you ever find yourself owing back thousands of dollars to the IRS and can't afford it, then usin...

If you ever find yourself owing back thousands of dollars to the IRS and can't afford it, then using a personal loan is the best route. (Pexels Photo)

(Pexels Photo)

Dear Dave,

My husband and I are following your plan, and we’re on Baby Step 2. We just learned that the person who has done our taxes for the last three years made mistakes on all our returns. They were really nice and did our taxes for free, but now we owe back taxes in the amount of $18,000. Since we’re still paying off debt, the only savings we have is the $1,000 in our beginner emergency fund. Should we take out a personal loan to take care of this, or set up payments with the IRS?

Laura

Dear Laura,

Take out a personal loan. Period.

Let this sink in for a minute. How often does Dave Ramsey tell people to borrow money? Almost never. Why am I doing it now, in this situation? Because the IRS is the worst creditor on the planet. They have almost unlimited power, which they use and abuse, and they have ridiculously high penalties and interest rates. With a personal loan from a local bank or credit union, you’ll at least have more input and flexibility in deciding the terms of the agreement.

Now, I don’t know about you, but if the person doing my taxes screwed things up to the tune of $18,000, I’d find someone else in a heartbeat. I understand you want to work with someone nice, and free is usually a great price. But in this case, free was not so free after all.

Just go to your local bank or credit union, explain the situation and see what you can work out. I always recommend small banks or credit unions over any of the mega banks. Places like Bank of America and Fifth Third just have no soul or empathy whatsoever. And the customer service at a credit union or small bank is a hundred times better than what you’ll find at a big bank. Sure, they’re still bankers, but there’s a human element in there. You’re not just a number to them like you are to the mega banks.

I hate debt, Laura, and I’m sorry you guys are in this situation. But 100% of the time, I’d rather have personal loan debt than IRS debt. In my mind, it’s the lesser of two evils.

— Dave

ENDORSEMENTS

Dave Ramsey

Feeling unmotivated despite financial success? Discover Dave's heartfelt advice on finding and livi...

Dave Ramsey

Dave says: Here’s some advice for a financially blessed couple

Feeling unmotivated despite financial success? Discover Dave's heartfelt advice on finding and living out God's purpose beyond wealth.

3 days ago

Here are my tips for staying sane over the summer break so you and your family can get the most fun...

Rachel Cruze

Here are 5 tips for staying sane this summer as a mother

Here are my tips for staying sane over the summer break so you and your family can get the most fun and joy out of the season!

6 days ago

In this article, Dave Ramsey speaks to a college student about financial priorities. (Pexels File P...

Dave Ramsey

Dave says: If I had to sacrifice school, work or cost of living, I’d do the latter

Dave advises Will to continue living at home if it helps achieve academic goals without debt, even if it delays independence.

10 days ago

Compassion and boundaries by Dave Ramsey...

Dave Ramsey

Dave’s entre-leadership: Compassion and reasonable boundaries

Navigating waters as a new business owner can be challenging, especially when trying to discern if an employee is taking advantage of you.

13 days ago

Days says wedding worries should be last on the list of things to worry about...

Dave Ramsey

Dave says: Wedding worries and emergency fund questions

There’s no correlation whatsoever between the size and/or cost of a wedding, and the happiness and success of the marriage.

17 days ago

When old debts come back to haunt you, the best option to take in order to get out of the mess is t...

Dave Ramsey

Dave says: Old debts will always find a way to come back and haunt you

When old debts come back to haunt you, the best option to take in order to get out of the mess is to pay it off.

1 month ago

Sponsored Articles

...

Sanderson Ford

3 new rides for 3 new road trips in Arizona

It's time for the Sanderson Ford Memorial Day sale with the Mighty Fine 69 Anniversary, as Sanderson Ford turned 69 years old in May.

...

Day & Night Air Conditioning, Heating and Plumbing

Beat the heat, ensure your AC unit is summer-ready

With temperatures starting to rise across the Valley, now is a great time to be sure your AC unit is ready to withstand the sweltering summer heat.

...

COLLINS COMFORT MASTERS

Here are 5 things Arizona residents need to know about their HVAC system

It's warming back up in the Valley, which means it's time to think about your air conditioning system's preparedness for summer.

Dave says: It really becomes about the lesser of the two evils