Take these steps to renew, review, refresh and regrow your finances
Spring has sprung and you’ve dug out the quarters between your
couch cushions. But there are better and more efficient ways to free up some
Here are seven tips on how to make sure your financial ship
is in shape.
1. Clear the clutter.
Just as spring is a good time to clean out your closets,
it’s also a good time to go through your finances and toss out the things that
no longer fit your life, says Gary Foreman, editor of frugality-minded
website The Dollar
Foreman and his family were using one of the inexpensive
movie download services so much that they dropped one of their expensive cable
subscriptions. “It was rare that we were watching it,” Foreman says.
His tip: “I go through the financial statements and
look at them like they’re closets,” he says. Ask: What am I not really
It’s not only expenses that need the Marie Kondo treatment. If
the receipts and statements in your filing cabinet (or the shoebox in the
closet) date back to the Reagan administration, it’s time to sort and shred.
Not sure how long to keep each document? Here’s a handy
guide on what records to keep and how long to keep them.
But knowing what to keep is only half the battle. Assemble a
simple, effective filing system, says Jonathan Kennedy Jr., president of
Endeavor Capital, a Richmond, Virginia., 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.
Signing up for online statements and paying bills
electronically might reduce the paper pileup but create electronic clutter.
“Going paperless is wonderful, providing users
understand that an effective e-filing system needs to be as organized as a
[traditional] filing cabinet,” says Regina Leeds, professional organizer
and co-author of “One Year to an Organized Financial Life.”
“Moving all statements and receipts to a single folder on the desktop is
just as bad as stuffing them in the file cabinet. Organization is
Be sure to back up all files stored electronically in case
of a computer crash.
Don’t forget to safeguard important documents. Financial
documents such as savings bonds, life insurance policies, deeds and property
titles and stock certificates should be stored in a fireproof safe or a safe
deposit box at the bank, Leeds said. Make an inventory and – just in
case – formally authorize a trusted adviser or family member to get access to
2. Plan (or recoup)
Warmer weather is here, so if you’re still
shoveling those leftover Christmas or vacation bills, now is a good time to get
rid of them, Foreman said.
One way to handle them is to strategize a one-time idea to
make some extra money, such as a garage sale, online sale or even volunteering
for overtime at work, he says.
If you’re good with self-control, your other option is to just
put yourself on a more stringent payment plan. Use an online credit card
calculator to see how quickly you can deep-six that debt. You’ll get
peace of mind and a huge savings in the amount of interest that you won’t be
paying every month.
Once you get ahead, stay ahead. Set back some money for
those inevitable Christmas presents.
“Take some of the pressure off your end-of-year shopping
sprees by saving the money earlier in the year,” says Taren Coleman, an
investment adviser from Bethesda, Maryland.
Sock away $200 each month beginning in April, and you’ll
have $1,800 by December.
Those savings could also go a long way toward your dream
“Now’s a good time to start thinking, ‘What are you
going to do for a vacation this year?’” Foreman says.
From “staycations” to weekend and long-weekend
getaways, there are plenty of economical alternatives to the old standard
A little advance planning can give you a financial
Open an account just for your big purchase, says Barbara
Stanny, author of “Overcoming Underearning: A Five-Step Plan to a Richer
Life,” who says a friend of hers is doing this to save for a dream purchase: a
Even saving just a little at a time, “It’s amazing how
fast it adds up,” she says.
3. Take advantage of
Let technology do everything you know you won’t do yourself.
In today’s digital world with so many ever-improving choices, less is more.
Set alerts to tell you when you’re approaching your preset
limits on credit and debit cards, says Linda Sherry, director of national
priorities for Consumer Action, a Washington, D.C.-based advocacy group.
Often you have the choice of setting them to reach you by
email or text message, and they are “tremendously helpful,” she
says. By avoiding going over your limits, you bypass having to pay extra fees.
You can also put your savings on autopilot. Set up an
automatic draft to your savings account, “even if it’s just $10 a
month,” says Stanny.
It’s as easy as going to your bank’s website and arranging
to have the money automatically transferred every month from your checking
account or payroll deposit, she says.
You don’t need fancy budgeting apps or credit management
tools on your smartphone to make your financial life easier.
Forbes technology reporter Kym McNicholas loves her bank’s
app: “I just downloaded Wells Fargo on my phone and paid off my credit
Decide which websites are most beneficial and that you use
the most, recommends financial planner Jane Nowak with Kring Financial
Management in Atlanta. 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.
4 . Scope out your
credit score and report.
You’re entitled to at least three free copies each year –
one from each of the three major credit reporting agencies – TransUnion,
Experian and Equifax. Get them for free at AnnualCreditReport.com,
the government-mandated site.
Review them thoroughly, checking closely for errors. Just
one negative item not belonging to you – a past-due payment, collection or
public record (judgments, tax liens, bankruptcies) – can land your score far
lower than where it should be.
Dispute any errors you find and allow about 30 to 45 days
for investigations to be completed.
After your first check, keep an eye on any change in reports
through your credit score. Start checking your credit score monthly – either from
one of the many credit
cards providing free scores or through CreditCards.com.
Considering the major
data breaches that put millions of consumers’ information at risk this year, your
credit may need more heavy-duty protection.
Mark Zaifman, founder of Spiritus Financial Planning in
Windsor, California, 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.”
5. Take stock of your
You know those old household white elephants that have been
around so long you don’t even see them anymore? Bad financial habits or
outdated decisions are just like that. Lurking on the edge of your life, they
take up space and resources without offering much in return.
But spring is a
great time to examine your financial “big picture” and clear out what
isn’t working for you.
Look at the reasons behind your current financial situation,
says Foreman. For instance, do you need to be a two-car family? And are those
family cars you bought then the best ones to meet your needs now?
Reassess your household bills as well, 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, cellphone, cable
TV, internet, homeowners/renters insurance and auto insurance.
A lot of people with credit card debt spread out over multiple cards have no idea how much they owe or what their interest rates are on their debt.
With this step, you might find that you want to cut spending,
increase your income or some combination of the two.
“Make it a focus and constantly look for ways to either
cut expenses or find extra cash to help achieve your goals,” says says
Jenny Realo, executive vice president of the debt deletion company CareOne
Services Inc. “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.”
The secret to getting the most out of this one: Take off the
blinders and really look at everything to find out what is (and isn’t) working
for you financially.
6. Consolidate cards
“A lot of people with credit card debt spread out over
multiple cards have no idea how much they owe or what their interest rates are
on their debt,” says Dorothy Barrick, financial counselor for the
nonprofit debt management counseling group GreenPath Debt Solutions.
Barrick suggests gathering all recent financial statements
and listing the amount owed on each credit card, along with minimum payments
and interest rates. From there, establish a plan to pay off one card at a time.
Though it’s always fastest and most economical to pay off the highest-rate debt
first, some people keep motivated by quickly paying off small debts completely,
regardless of rate.
After strategically paying down debt, consider which
accounts could be closed or consolidated.
A little bit of research could net better rates on
everything else from your mortgage and car loan to your credit cards.
When looking for better rates, “Shop within your own
bank and compare their rates to those offered by other financial institutions
as well,” suggests Reynolds. “And don’t just shop online because not
all institutions offer their products over the internet.”
In comparing interest rates, read the fine print. For
example, does a bank require a minimum balance to switch to a higher interest
savings account? What are the terms and conditions linked to a zero percent card offer?
What are the closing costs associated with refinancing a mortgage to a lower
“You have to look at the overall cost of the switch, not
just the monthly payment,” says Reynolds.
Your credit card company may also be willing to grant an
interest rate deduction. According to Barrick, cardholders with good credit
scores and solid payment histories often qualify for reduced rates, which can help
eliminate debt more quickly.
“It never hurts to pick up the phone and ask,” she
According to Reynolds, there is another benefit to managing
fewer accounts: It makes it easier to monitor account activity and identify
possible fraudulent use.
Before rushing to close credit accounts, remember, it could
result in a short-term drop in your credit score.
It’s a good idea to keep your oldest credit card because “One factor
of your credit score is how long you’ve had credit,” Reynolds says.
7. Check those
beneficiaries, insurance and investments.
Some financial accounts (insurance policies, too) don’t pass
through your will, even if you have one. Instead, the assets go directly to the
beneficiaries you named when you opened the account or bought the policy.
Over the years, life changes. You get married, divorced,
have children, etc. But too often, you forget to revisit those beneficiary
selections. That means if the worst happens, the money in that bank account you
opened in college, pre-spouse and kids, could still go to Aunt Edna or your ex.
So take a look at each of your financial accounts and
insurance policies to make sure that the money will go where you need it to go
now – not where you wanted it to go years ago.
In an effort to make those accounts the best they could be,
Ann C. Logue, chartered financial analyst and author of “Socially
Responsible Investing for Dummies,” suggests an annual investment
“For many people, their largest investment accounts are
tax-advantaged retirement funds,” notes Logue. When to review those
accounts? Now. “Spring is a good time because they can consider
investments with their taxes.”
If you have an investment adviser, make an appointment to
review your investment accounts. Never worked with an adviser? Consider hiring
“A good planner can help make sure your investments
meet your goals, fit your risk and return preferences and suit your tax situation,”
Your financial institution or employer may make referrals to
financial advisers. If you’re doing your own search, Logue suggests asking
about education and experience as well as their fees. Planners may work on a
fee basis, commission or a combination of both.
The fee structure “may affect whether you can
afford the planner, the types of recommendations you get and the incentives the
planner has to work with you,” she says. “None of these is inherently
better, as long as you understand that nothing comes for free.”
See related: How to pick the right card for you, When credit card annual fees are too high for your budget, 6 things to consider before choosing a credit card
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