Ahh…. Spring is in the air. Birds chirping, children frollicking in the park, opening day baseball, tax returns, my dog shedding clumps of hair, non-stop rain, sinus allergies…..focus, G.E., back to the positives…. flowers, ice cream, personal finance domination.
Something about this season always makes me want to de-clutter things, particularly my finances. Here’s a list of the things that I’m doing this Spring (and typically do every Spring) to keep my finances in order. All can be accomplished in an afternoon. It will be time well spent.
1. Shred Old Financial Documents
De-cluttering your finances starts with reducing paper clutter. I’m conservative in keeping tax records going back 7 years and about 1 year on everything else. Beyond that, I have been shredding everything. I recently shredded enough documents to fill 5 paper grocery bags! I’d recommend getting a cross-cutting shredder that shreds 12 or more pieces at the same time and also shreds old plastic cards, like the Amazon Basics Paper Shredder. I personally bought this and it’s rock solid. It even has a slot for CD’s. If you’re throwing this stuff in the trash, un-shredded, you’re leaving yourself vulnerable to identity theft and fraud.
2. Check your Free Credit Report and Clean Up Any Discrepancies
AnnualCreditReport.com (the real-deal website, mandated by the federal government) offers you three free credit reports annually. Space them out every 4 months to check for discrepancies and avoid taking any unnecessary credit score hits. If you want more frequent access, Credit Karma now offers free credit report access continuously to your TransUnion credit report!
3. It’s Budget Cleanup Time!
Yes, I know you didn’t want to hear this one, but it’s oh so important. I wrote a pretty comprehensive post that includes a budget spreadsheet that I designed and used personally. Check it out, and see where the holes in the bucket are. Then plug them ASAP.
4. Stop Settling for Paltry Interest Rates on Short-Term Cash Holdings
For your emergency savings fund and other short-term cash holdings, you might as well earn best in industry rate yields on your savings. Right now, that is around 1%, but it changes frequently. The 5 online banks that I usually see at the top of the list for savings rate yields are Discover Bank, EverBank, and Capital One 360. All offer a pretty comprehensive product offering if you want to expand beyond a savings account.
5. Move Long-Term Investment Funds From Savings & Checking Accounts to Investment Accounts
Since interest rates are so low, you might actually be better off moving your cash to an online discount broker, and pairing it with credit cards. You can typically get your cash back, if you needed it within days, with ACH withdrawals.
I give myself low marks for letting long-term investment funds sit in my bank account. With the market run-up, I missed out on thousands of dollars worth of capital gains because I simply wasn’t keeping up on moving those assets over to investment accounts. Don’t get caught sitting on interest rates of 1% or below and having inflation eat away at it.
6. Consolidate Your Brokerages
Having too many brokerage accounts is a great way to easily lose track of your financial allocations. I recently switched my IRA from ETrade to TradeKing. More recently, my wife rolled over her Roth and Traditional 401K from her last job to a TradeKing Roth and Traditional IRA. TradeKing offers IRA’s without annual fees or inactivity fees. And trades are just $4.95.
For non-retirement accounts, I also recommend TradeKing and Vanguard (if you are in to trading ETF’s).
7. Re-Allocate Investments
Once you have consolidated brokerage accounts, it’s time to do a little re-allocation. With the market having the run that it has had, now would be a great time to go through your stocks, mutual funds, and other investments and make sure that the asset allocation is re-distributing to the correct portions. This might require moving some money around. In my case, it also means moving my accounts around.
8. Get the Best Debit & Credit Card Rewards
First off, cancel any credit cards you are not paying in full each month. Glad we cleared that up. If you ARE going to effectively use a credit card, make sure it is one that is giving good rewards. I average about 2% cash back on my rewards cards.