10 ways to spring clean your finances
Spring. It's the season of invigoration, a time to ditch dusty financial items and habits and start fresh with just what you need to succeed. Here's what you need to do, to get and to ditch over the next few months.
1. Organize paperwork. Vital documents scattered to the four corners? Assemble a simple, effective filing system, says Jonathan Kennedy Jr., president of Endeavor Capital, a Richmond, Va., financial planning firm. "All you need is a three-hole punch and dividers. Have one binder for utilities, one for financial statements, one for credit cards and one for miscellaneous. Keep the previous six months of bills on hand and get rid of the rest." You'll be left with a few neat notebooks on a shelf, rather than drawers full of papers and files.
2. Redefine and prepare for goals. Bet you can't remember when you last thought about where you want your money to take you, and then mapped out an effective route. Do it now. "Fewer than 5 percent of Americans have a financial plan and those with one are almost three times as likely to hit their financial and retirement goals," says Bryan Link, CEO of the online goals-based planning service SimpliFi. "As simple as it sounds, getting a plan in order makes things easier."
3. Blend investment accounts. If you have assets in IRAs, 401(k)s, SEPs, SIMPLE Plans and the like, consider combining them. Why? Two reasons, says Kennedy. "One is that the fewer accounts you have, the less you'll pay in fees." The other: "The more money you have working together, the more velocity you can get behind that money, i.e., the faster the money will grow." He suggests engaging a financial professional, setting up a brokerage account to take custody of the assets, updaing asset allocation strategies and transfering assets to achieve them.
4. Scavenge for winter. The amount of money you dropped for gifts and other holiday expenses last year should still be clear in your memory banks. Get ready for 2011's costs by starting immediately. "Take some of the pressure off of your end-of-year shopping sprees by saving the money earlier in the year," says Taren Coleman, an investment adviser from Bethesda, Md. Sock away $200 each month beginning in April, and you'll have $1,800 by December.
5. Useful apps. Sure, the Angry Birds app is fun, but why not put your smart phone to more serious use as well? Check out the array of helpful personal finance applications you can download. Most are free or only a couple of dollars. Forbes technology reporter Kym McNicholas loves her bank's app: "I just downloaded Wells Fargo on my phone and paid off my credit card!" On-the-go money and credit management tools are waiting for you.
6. Missing money. Finding change under your sofa cushion can be thrilling, but locating real money outside the home is even better. See if you're owed anything today. Many states have joined with the National Association of Unclaimed Property Administrators to help identify unclaimed property and make it easier for owners to reclaim it, says Coleman. Unclaimed property may be bank accounts, stocks, bonds, dividends, utility deposits and more. Log onto missingmoney.com's database of unclaimed property records maintained by the government.
7. Credit fraud protection. Mark Zaifman, founder of Spiritus Financial Planning in Windsor, Calif., and contributor to the best-selling book, "Your Money or Your Life," says give yourself the gift of peace of mind: Add a security freeze to your credit reports. "Out with the old about worrying if someone will steal your identity and in with the new security freeze," says Zaifman. "It's by far one of the greatest consumer protections available in terms of preventing identity theft."
8. Excess financial websites. Bogged down with too many money management websites? While companies and tools such as JustThrive.com and Quicken.Intuit.com are designed to help, an overabundance causes unnecessary confusion. "Purge what doesn't serve," recommends financial planner Jane Nowak with Kring Financial Management in Atlanta. "Decide which websites are most beneficial and that you use the most." For those that don't make the cut, remove all personal information and unsubscribe to them. "In today's digital world with so many ever-improving choices, less is more," says Nowak. "Simplify your financial life and to keep it simple."
9. Unnecessary expenses. Reassess your household bills, says Coleman. "As the seasons change and time goes by, our needs change and so do the offerings from our service providers." See if you can save money by switching to a better package or policy for your home phone, cell phone, cable TV, Internet, homeowners/renters insurance and auto insurance.
10. Consumer debt. Leave balances in the cold, says Jenny Realo, executive vice president of the debt deletion company CareOne Services Inc. "Make it a focus and constantly look for ways to either cut expenses or find extra cash to help achieve your goals," says Realo. "This time of year creates some unique opportunities to give your finances a boost." For example, if you're receiving a tax refund, use that money to pay down debt, starting with the credit card with the highest interest rate. Tidy up your living space while gathering funds: "Purge your closets for items to sell in a yard sale or on eBay and then put that money toward your debt; it will help clean up your home and your finances."
In short, think renewal. Say goodbye to accumulated financial clutter, and welcome in pristine money systems and advanced techniques.
- Research: On sunny days, put the credit cards away! – As the mercury rises, research shows we tend to spend a bit more carelessly ...
- Instant credit: Convenience often comes at a price – Instant credit is geared to helping you face unexpectedly large bills, but convenience could come at a price ...
- 8 ways to negotiate better credit card fees, interest and debt – Under certain circumstances and with the right approach, cardholders may be able to have their interest rates, account fees or even their balances lowered ...