With spring rapidly approaching, it’s not only a great time to spruce up your home and organize your closets, but it’s also an ideal time to clean up your finances. Here are some ideas from some top consumer finance advisers:
Sweep away winter bills
Here’s a scary statistic: Consumer Reports estimates that 7% of all shoppers go into a new holiday season carrying debt from the previous one. And it’s costly. You certainly don’t want to continue making payments on your holiday purchases for another 9 months.
“Clearing away this debt in the spring will strengthen your finances and free you up to save money for the remainder of 2015,” says Lynnette Khalfani-Cox, founder, The Money Coach.
Polish your budget
We’re three months into 2015. How are you doing so far? Over budget? Under budget? Have you spent more, or less, than you planned to in certain areas? If you’re close to your expectations, great, but if you’ve veered off track for any reason – perhaps because there’s been a job switch, you had a baby, bought a new house, or there’s been another life change - it’s time to re-evaluate the situation, says consumer finance expert Andrea Woroch. “Your budget will need to be refreshed to meet current needs as well as short and long-term savings goals.”
Tidy up bad credit
Have you been subject to high interest rates? Denied a loan altogether? Been unable to rent an apartment? If you’ve got bad credit, then you’re aware of these consequences. To improve your score, make your payments on time and avoid carrying large balances on your credit cards (keep your utilization rate — the amount you owe versus your total available credit — below 30%; ideally, use no more than 10%).
But first: “Take an inventory of the information on your reports by claiming them,” says John Ulzheimer, President of Consumer Education at CreditSesame.com. You can do this for free, once every 12 months, at AnnualCreditReport.com. While derogatory information can remain on your report legally for 7 to 10 years as long as it’s accurate, says Ulzheimer, errors — like accounts that aren’t yours or inaccurate late payments — are common and should be disputed. After all, a report by the FTC found that one in four credit reports contain an error that might affect your credit score, which is the all-important numerical value (typically between 300 and 850) assigned to the information in your credit report.
If you’ve already filed your income taxes, shred statements, bills and other financial records and keep only the documents that are absolutely necessary, says Khalfani-Cox. As a rule of thumb, you want to hang onto tax records and supporting documents for seven years, and it might be easiest (and provide you with peace of mind) to keep hard copies of those (even though the IRS is ok with digital copies). But no need to hang onto paper records forever. “If you’re worried about something, just scan or make a digital copy of the record and then shred it.”
Dust off unwanted items
To boost your savings goals or earn extra money to help pay down debt, Woroch suggests selling unwanted gift cards — which we all have — on a site like Gift Card Granny where you can get up to 95 cents on the dollar in return; and recommends Thred Up for baby, kids and women’s clothing. As for old electronics, consider Gazelle and Nextworth, says Farnoosh Torabi, host of the daily podcast, “So Money,” on iTunes. “You’ll get a fast quote, a free shipping label and quick payment once the item’s mailed in and inspected.” And the payout is generous: Torabi herself recently got quoted $150 for her used 3rd Generation iPad on Gazelle.com.
Clean up accounts
Are there brokerage accounts that can be consolidated? Bank accounts you rarely — if ever — use that should be closed? Old retirement accounts from previous employers that should be rolled over? After years of bill paying online, do you have a huge list of creditors you have to scroll through every time you make a payment? “Take a few minutes and delete the ones you know you’ll never be paying again,” says Jean Chatzky, author of “Money Rules.”
Straighten out spending
We all know that the key to financial freedom is to spend less than you earn. However, given how easy it’s become to spend (particularly given the growth in mobile payment systems like Apple Pay), and given the proliferation of ads, marketing schemes and various tactics that tempt us to buy more than we need, keeping spending in check is becoming increasingly challenging. It’s more important than ever that you control impulse shopping, says Woroch. How? “Eliminate triggers such as browsing favorite online shops, heading to the mall after work to ‘window shop,’ or buying something new when you’re feeling down to help boost your mood.”
When it comes to need-based purchases, to get the best prices, Woroch suggests using apps like Coupon Sherpa, RedLaser, and PoachIt.
By Vera Gibbons
Vera Gibbons is a financial journalist. A former analyst with MSNBC who appeared regularly on the “Today Show,” Gibbons has written for numerous magazines including Inc., SmartMoney, Kiplinger’s, Real Simple, and All You. She recently hosted a series on Yahoo! called “Savvy Spender” and has just completed a personal finance insurance series for msn.com.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which course of action may be appropriate for you, consult your financial advisor. No strategy assures success or protects against loss. LPL Financial is not affiliated with the individuals, firms, and hyperlinks mentioned herein.
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