Springtime is here! Before you get too excited about the warm weather, remember spring cleaning is coming up too. This year, don’t forget to include cleaning up your finances! Spring is a great time to set goals to get organized, become debt free, and increase savings.
A good place to start is decluttering your saved financial documents. It is advised that you save financial documents for the following lengths of time:
- Tax information – for a minimum of 3 years but the IRS recommends 6 years in the event you are audited
- Medical records – for at least a year; however, 3-6 years if used for tax purposes
- Large purchases – for as long as you own the item. Keep documentation of repairs and warranties as well.
- Retirement information – permanently hold documentation
Consider scanning copies of your documents to have a second electronic copy as well. Be sure to shred your old documents that contain sensitive information.
Protect your assets
While getting organized, be sure to update your insurance inventory. Photograph and document your possessions you would need to report in the event they are damaged or stolen. Make sure to document and save your receipts on any new items that you purchase.
Verify your liabilities
It is vital to know the debts you owe and to which creditors. Take the time to pull your credit and verify each trade line. Not all creditors report to all the bureaus, so it is important to pull all three credit reports: TransUnion, Experian, and Equifax. You can pull your credit reports for free once a year from annualcreditreport.com. Keep in mind, positive and negative information will stay on your credit report for 7-10 years. If any information on your report is inaccurate, you may submit a dispute letter or add a statement to your report.
Going forward, consider pulling one credit report from a different bureau every four months.
Restructure your budget
Review your income and expenses from the last 60 days to set up a working budget. Implement changes to either increase income or reduce expenses as necessary. Remind yourself what your needs are vs. your wants.
Consider restructuring your monthly expenses:
- Contact your utility providers to set up budget billing
- Shop around for cheaper phone, cable and internet contacts
- Consolidate your home owners insurance and car insurance for lower rates
- Research other checking accounts that offer lower or no fees
Strategize how you will pay down your debts
After reviewing your budget, set a plan for how much cash flow is available to pay down your debts.
One strategy that saves you time and interest is the power payment system. With this debt repayment structure, you pay any additional funds in your budget to the debt with either the lowest balance or the highest interest rate. As debts are paid off, you continue to address the debt with the highest rate or lowest balance until all debts are paid completely.
Another option to consider is a debt management program. The program allows you to pay down your debt through a consolidated monthly payment. Through the program, creditors will typically offer concessions such as lower interest rates and lower minimum payments. The overlying goal of the program is to have you debt free in 3-5 years.
Create a savings plan
If you don’t have one already, set up an emergency savings account. Ideally, you want to have 3-6 months of living expenses set aside for any expected or unexpected expenses. Take the time to compare different savings accounts and their interest rate. Compare online savings accounts to traditional banks to see who offers the most return on your money.
Once you have a stable amount of savings, you can look into investments for retirement. If your employer offers a 401K, reevaluate your contributions from each paycheck. If you are able to contribute more, great! Your employers may match your contribution and your investment grows tax free. If you have already maxed out your contribution or if you employer does not offer a 401K, look into investing on your own in stocks or mutual funds.
Need help getting on track?
Contact Apprisen to see how our certified financial specialists can help you spring clean.
To schedule an appointment call 1-800-355-2227 or visit our website http://www.apprisen.com to chat with a representative.