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"Nation of Debtors" Made Worse By IRS Decision

For Immediate Release
February 23, 1999

Media Contact: Will Casserly
wcasserly@ricedelman.com
(703) 251-0110

Change Withholding At Work And Take Home More Of Your Paycheck, Says WMAL Radio Personality and Financial Planner Ric Edelman

February 23, 1999, Washington, D.C.? Would you loan a perfect stranger $150 per month interest free, while charging your tax bill at interest rates as high as 18% per year? You shouldn't, but that is what millions of Americans are doing this tax season thanks to poor financial management and a bad decision by the government, said Ric Edelman, chairman of Edelman Financial Services Inc, on his weekly AM 630 WMAL radio show.

The Internal Revenue Service (IRS) has paid out $27 billion in refunds so far this tax season, Edelman said, with the average refund totaling $1,823. That is the equivalent of giving the IRS an interest-free loan of $150 per month for the entire year, Edelman said, adding that many of the people who are getting these refunds also owe money to credit card companies. "Apparently, millions of consumers are willing to be indebted to MasterCard, American Express or the Discover Card merely so they can give the IRS a tax-free loan," said Edelman, author of The Truth About Money, from HarperCollins. Edelman offered consumers a simple solution: "Change your tax withholding at work," he said. "This one simple act could increase your monthly take home pay by as much as $150 per month."

Edelman also warned taxpayers not to pay off their tax bills by using credit cards, as the IRS is touting this year. According to the Treasury Department, American consumers had over $1.2 trillion in outstanding debt in November, said Edelman. "If you don't have money to pay your tax bill, the IRS will lend it to you at a cost of about 13% per year in interest and penalties. That's a lot less than the 18% that many credit cards charge," he said. Speculating as to why consumers would prefer owing MasterCard 18% instead of owing the IRS 13%, Edelman told his listeners that "many consumers fear the IRS more than they do credit card companies. After all, MasterCard cannot freeze your assets, garnish your wages or audit your finances, but the IRS can." Information on a variety of financial matters can be found on Edelman's web site, www.ricedelman.com.

The Ric Edelman Show is heard every Saturday morning at 10 am on Newstalk 630 WMAL. WMAL is Washington, D.C.'s number one news/talk radio station, and is owned and operated by ABC.