Spring cleaning around the home is a yearly routine people accept to purge unwanted items, reducing clutter and junk. However, few think about spring cleaning finances. Spring cleaning finances indicate a person's standing with debt, income, budget, and savings. It makes future financial decisions less complicated and perplexing. Still, one has to begin somewhere, so let this information assist.
Rework the Household Budget
To achieve this goal, take an honest and indifferent look at previous and current spending habits. Include food, entertainment, sports, gym memberships, prescription drugs, and dining. Find avenues to cut corners. Examples include switching phone providers, dropping cable, adjusting subscriptions, and lowering utility bills. Use the answers to create a new or reworked budget estimate. Test the new budget by living in that bubble for several months. Tweak the budget if any flaws appear until the concluding budget works in the household's best interest. Budgets are profitable when an objective such as a large purchase or meeting monthly rent is the focus.
Start Saving Now
A little amount saved each month adds up to a large amount by year's end. The money saved could go toward emergencies, repairs, Christmas spending, vacations, weddings, and a down payment on large purchases. If possible, use the extra money gained from reworking the home budget to place it toward savings.
Check Credit Card Reports and Bank Statements
TransUnion, Experian, and Equifax allow one free report annually, so examine the report during spring cleaning. Review credit card history to find mistakes. Mistakes drag down the credit score, hurting chances to make big purchases, obtain a loan, or secure a mortgage. If errors exist, contact the report that included the error. Call the credit card company too. Likewise, check paper bank statements or view bank statements online. Delve into detail to ensure bank balance is accurate. Additionally, find hidden bank fees and fees for unused services. Contact the bank about these changes.
The first answer to that phrase should be the outstanding debt on credit cards, utilities, mortgages, cable bill, medical bill, car note, home improvement, and third-party loans. Understand the amount paid is interest. Aim for a debt-free life by attacking debt head on. The approach - the balance with the highest interest rate or the smallest balance - depends on preference. Balances with high interest rates save money in the long term, yet eliminating small balances first is a boost of confidence to tackle larger debt.
An idea to reduce debt is consolidation. Consolidation gathers all credit card balances and transfers them to one card, making it easier to pay balances and escape debt. People with at least two credit cards should review the outstanding balance, minimum payment, and interest rates for all. Research current credit cards, banks, and online deals for consolidation offers. Consider consolidation fees and monthly payments on preferred cards. Ask questions to card companies and banks before choosing a credit card.
Cash in on Credit Card Rewards
Before consolidation, review current credit card rewards. Points, cash, dining, frequent flyer miles, and loyalty club memberships are examples credit card companies offer valued customers. Sadly, most rewards expire by a deadline while some contain a fee to keep rewards flowing. Redeem those rewards. Afterward, determine if the rewards - and the credit card - are worth keeping by probing credit card use, the expiration date, and the fee amount.
Refresh Insurance and Wills
Financial elements rarely reviewed after activation are insurance and wills. Check life, auto, health, homeowner's, and/or renter's insurance. Update expired coverage along with reviewing premiums, deductibles, and coverage. Include or remove children, spouses, and family members in all insurance coverage. Ask insurance providers on ways to lower premiums, adjust deductibles, and add/remove coverage. Move to a new insurance provider if necessary. Update beneficiaries on life insurance and bank accounts. In the same vein, review wills to include and remove assets and beneficiaries.
Stocks, bonds, brokerage accounts, retirement accounts, and gold/silver products contain fees and services bundled with the purchase. Review all investments and eliminated irrelevant services not necessary to the account's use. Unify or close unnecessary accounts to focus on accounts needed for today and the future. If necessary, add investments to prepare for retirement and the family's future. All investments made should match age and future aspirations. Adjust workplace retirement accounts and pensions.
Throw out expired or inactive financial documents. Toss deposit slips and carbon copy checks six months after transactions are complete. Throw out documents over a year old. Shred those documents before tossing it in the trash; predators will dig through trash to steal financial information.
Keep tax and court-related documents, receipts, and checks. Keep all documents under a year old. Go paperless to eliminate irrelevant clutter so only necessary online documents become printed hardcopy. Store saved information in a folder or file system.
Confidence, peace of mind, and perseverance are three qualities blooming after a thorough purge of finances. Confidence comes from understanding the debt, income, budget, and savings incurred during the investigation. Peace of mind comes from understanding the pros and cons of the unique situation. Perseverance comes from working hard to eliminate debt and impulse buying while vehemently staying on budget. Continue to spring clean finances yearly for beneficial results and keep an eye on the progress made now. Every error addressed and resolved is a step closer to financial control.