11 Ways to Spring-Clean Your Finances
As summer approaches, it's time to toss old papers and check your credit
When spring fever hits and you start tossing out old clothes and scrubbing the floors, don't forget to give your finances some fresh air, too. Here's an 11-step guide to a cleaner -- and healthier -- financial life:
1. Put papers in their proper place.
You're probably just wrapping up your taxes, which means it's the perfect time to establish some
smarter paper-tracking habits.
2. If you don't need it, toss it (or archive it).
You'll probably need to hang on to important documents (some states require taxpayers to keep up to 10 years of filings on hand), but much of your old paperwork belongs in the trash or the shredder if it has valuable information on it, such as bank account numbers. Store your most important documents, such as certificates, in an archival box or locked metal file cabinet that's separate from your day-to-day files, advises Leeds. "Every year, take a look at your archived files. You might be able to eliminate a few projects each year," she adds.
3. Go electronic, go green.
"Just about everything these days is online, so all the old rules about what you need to keep are changing," says
If you're still hooked on old-fashioned paper statements, try this: As soon as your first-quarter account statements arrive, shred the monthly statements for January and February, suggests
4. Check your credit.
Your credit report deserves a little TLC, too. Get your free annual credit report at annualcreditreport.com to check for any errors and fix any mistakes that could be dragging down your score, Cheng says.
5. Pay it down.
If you're still carrying debt on credit cards, check their interest rates and balances and make a plan to pay them off. If you're due for a tax refund, consider using it to pay off that expensive debt. Or, use the extra money in your paycheck from the
6. Play catch-up.
"It's a great time to assess that status of your retirement savings," says
7. File for flex dollars.
If you haven't finished your flex spending paperwork for 2010 for any outstanding healthcare expenses, you might have a few more days to do so, depending on your employer's policy. Make sure you don't leave any money in your 2011 account, because you'll lose it. Don't forget to read up on the latest flex spending rules: The
8. Review your relationship with Uncle Sam.
Gandelman says now is the perfect time to revisit whether or not you're withholding the correct amount from your paycheck, since taxes are still fresh on the mind. If you are set to receive a large refund, you might want to consider withholding less throughout the year to better manage your cash flow. Or, if you owed a lot to the
9. Cover up.
Check on your insurance coverage, including renters, homeowners, life, and car. Do you have enough? Or do you have too much? When it comes to a car, for example, older vehicles may no longer need comprehensive coverage, says Cheng. Meanwhile, raising your deductible on homeowners insurance could lower your rate. "Consider bundling services to obtain a discount," says Cheng. Your credit check also helps you here, since consumers with lower credit scores are often considered higher-risk individuals and assessed higher coverage rates, she adds. At the same time, make sure your beneficiary designations are up to date.
10. Clean out your car.
This more traditional spring-cleaning move will actually help with your bottom line, too. Cleaning out the junk in your trunk, especially big, bulky purchases of water or other supplies, weigh down your car and force it to use more gas, says Leeds. Instead, use your garage for storage and keep your car as light as possible. Also, take advantage of the nicer weather to check your tire pressure and get a tune-up, which can also boost your gas mileage.
11. Feng shui your investments.
The ups and downs of the stock market might have knocked your portfolio out of whack. Take the time to rebalance it, based on your age and desired risk level, says Cheng. "You can't take the 'set it and forget it' attitude with your retirement savings," she adds, since such a passive attitude could result in an overly risky -- or insufficiently aggressive -- portfolio.
After you complete these 11 steps, don't forget to pour yourself a glass of iced tea and enjoy the weather.
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Personal Finance - 11 Ways to Spring-Clean Your Finances
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