Paid off my New York back income taxes

I finally bit the bullet and paid off the remaining balance on my installment plan for my New York back income taxes (state and city). I actually had the cash back in June, but first I wanted to build up my financial reserves, including a reasonable size "rainy day" fund.

As of last week my net financial worth finally came back in the black. Even after paying off my New York back taxes, I still have a fairly large pile of back income taxes that I owe the IRS on yet another installment plan. I had made the decision to bulk up my savings, incuding my "rainy day" fund and 401K retirement plan, at the expense of paying down the taxes quicker. Having cash in the bank or assets you can liquidate gives you a lot more comfort and flexibility than if you had less debt and no cash to cover unexpected contingencies.

My default intent is to apply my old budget for New York installment payments as "extra" payments on my IRS installment plan. I might also direct some or all of the payment to further bulk up my "rainy day" fund, especially since it is a little too light after paying off New York.

It turned out that I had made enough extra payments to New York over the past six months that I was well ahead of where I thought I was. I decided to apply that "excess" as a contribution to my Roth IRA (not to be confused with my company Roth 401K). That's not quite a rainy day fund, but since I'll keep it in cash for now, it's close enough and gives me a little greater confidence about my retirement planning.

-- Jack Krupansky