Spring Financial Cleaning
Doing some spring cleaning? Make sure to include your finances!
May 14, 2013 by Mark Dye
Spring brings with it the greening of the trees and the singing of the birds, which is a nice change from the dull, gray landscapes and howling winds of winter. It also brings spring cleaning—which should include sprucing up your finances.
Start by getting a copy of your credit reports, for two good reasons:
- Everyone can receive one free report each year from each of the three bureaus at AnnualCreditReport.com. This is the one and only site that legally provides you with copies.
- Checking your credit annually ensures that your payments are being reported correctly and that you haven’t been a victim of identity theft.
Next, set a short-term financial goal: a bill you want to pay off or a debt to prioritize. Paying off credit cards is often a good choice because of the “minimum payment trap.” It “traps” you into making merely the minimum monthly payments, resulting in a possible 10-year timeline to pay your credit card bill in full. Ouch.
Once you choose your short-term goal, it’s time to dust off your emergency savings account and add to it, or start one if you haven’t already. To build up the account, set up an allotment or direct deposit—that way you’re “paying yourself first” before you can spend the money on something else.
After that, check your long-term goals—such as your retirement account and other investments—to see if they need sprucing up. You will want to make sure the funds you’ve selected are doing well and, as you get older, reallocate money into less risky investments.
Finally, it’s time to clear out old files and shred old documents. Bank records more than seven years old, utility receipts from two years ago and other now-outdated docs can all go. (Note that you can get a good shredder for around $50, and many communities offer free document shredding days, either annually or monthly; call around to see if such a service is available in your area).
Freshening up your finances each spring can help keep your credit clean, your bank account balanced, and your financial future secure. Now, about that mess in the garage …