2015 is off to a fast start, so, before it gets TOO late, here are some strategies from the experts on how to declutter your finances in 2015:
Buy a shredder. “There is no reason to hang on to old utility bill stubs, credit card and bank statements, and the like,” says Eric Meermann, a financial advisor with Palisades Hudson Financial Group in Scarsdale, NY. “These days, most service providers have online access to these statements.” A cross-cut shredder is most secure, but even a shredder that cuts documents into strips will do the trick. Figure out what to keep and what to toss here.
Pay down debt. Consider: For every loan in your life, you receive statements and must make payments and factor those payments into your finances. The fewer debts you have, the fewer payments you must make each month. “Last year, I eliminated my $40,000 student loan debt at the age of 24 and became debt free except for my house,” says Michelle Schroeder of MakingSenseOfCents.com. “This way I had one less large expense to pay for, one less bill to not look forward to each month, and one less bill payment to schedule.”
Pay bills immediately. If you receive a bill and set it aside to pay later, you are just adding extra steps to the process. Open bills while you sit next to your computer, and pay them online or via check right then. If your budget makes it difficult to pay all bills directly, many sites allow you to schedule your payment for a later date.
Automate savings. “I’ve automated my savings so that I pay myself first and keep money earmarked for disposable spending in its own account,” says Hilary Hendershott, a financial planner and founder of Hilary Hendershott Financial in San Jose, CA. Take advantage of your company’s [401(k)] plan to save for retirement, and have money automatically transferred to a savings account or your Roth IRA (or both) on paydays.
Set up automatic bill pay. “Use a bank or credit union that has an online bill payment system and set up as many automatic payments as you can for known recurring expenses, such as car payments, insurance premiums, your mortgage, and loans,” says Darin Hayes, a financial advisor at D.A. Davidson & Co. in Coeur d’Alene, ID. Similarly, have annual and semi-annual policies such as car, home and life insurance auto-renew.
Consolidate accounts. Do you have old 401(k)s and IRAs languishing at different companies? That means multiple statements and the mental bandwidth of trying to keep track of it all. “Combine multiple IRAs and old employer retirement accounts into a single IRA,” says Christina Povenmire, a financial planner in Columbus, OH. Bonus: Rolling old [401(k)] money into [an IRA] generally results in lower fees and better investment options.
Ditch paper receipts. Try an app such as One Receipt to take pictures of your receipts and organize them digitally. Then trash the originals. “It really cuts down on the clutter,” says Lauren Bowling, a personal finance blogger at L Bee and the Money Tree. Another idea: Create an email account solely for keeping track of business expenses. “Every receipt is scanned and sent to the email address as well as all online bills and receipts,” says Leisa Peterson, a financial advisor in Truckee, CA and founder of the Wealth Clinic.
In fact, ditch all paper. Unless you need an original for tax purposes, there’s no need to keep paper versions of your files. Consider a tool such as the NeatDesk or NeatReceipts scanner to make this happen. “I’m a huge believer in scanning everything in,” says Roger Pine, a financial advisor in College Station, TX. “Your files will take up zero physical space, it’s fire and break-in proof, and it’s a faster search for a document you’re looking for.”
Organize online statements. Use a service such as FileThis.com, which will download and file your online statements from up to 30 financial institutions every month. (Cost: $0 to $5 a month, depending on how many statements you want to collect.) “I love having all my statements just show up in Dropbox without ever having to go to each site to get them,” says Colin Drake, a financial advisor and life coach at Drake Wealth Management in Sausalito, CA. “Hard copies are always available on my computer.”
Outsource. “If you have a complicated tax return, hire a CPA,” says Thomas Scanlon, a CPA and financial advisor with Borgida & Company in Manchester, CT. “If you have investable assets, hire a financial advisor on a fee basis. Time is a valuable resource. Hire the right folks to work with you.”
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