I love what the spring represents. It represents growth, lightness, and newness. That’s why I understand the concept of “spring cleaning” …out with the old and in the new. For the last couple of weeks, I have engaged in some serious spring cleaning around the house— cleaning out closets, drawers, and files. For the beginning of April, I plan to switch my attention from spring cleaning our house to spring cleaning our finances.
Financial Spring Cleaning: 6 Ways to Get Your Money Right this Season
In this article:
- Review your budget
- Pay off small bills first
- Get to shredding
- Organize your files
- Collect all of your loose change
- Call in all of your loans
Review your budget
There have been a few financial changes in our household. My hubby got a new job and I have been working a lot of overtime. Speak about real-life implications when there is a new set of financial circumstances. If there is an increase in household income, will you use the money for a house fund, to take a vacation, to invest in our businesses, to donate, or invest? If there is an unexpected expense, how will you account for that money gap? Will you sell something or identify a new income source?
Pay off the remaining balance of those small bills first
Organize your outstanding bills from smallest balance to greatest balance. Pay the minimum balance on all of them except the smallest one. Put all of your extra money toward that smallest, nagging bill and be done with it. Use this “snowball” effect until all of your bills are paid.
Get to shredding
One of the best financial tools for the house has been the purchase of a shredder. When you are organizing your financial house, a shredder is essential for distinguishing between the “important” and “not-so-important.” A shredder also safeguards you from becoming a victim of identity theft. Spend some of your spring cleaning schedule shredding documents that contain sensitive information like account numbers, your full name and address, and Social Security number.
Organize your files
The Internal Revenue Services website has rules of thumb for how long you should hold on to certain financial documents. Generally speaking, you should store most tax documents for three years, but if you did not file a return or you filed a fraudulent return, the IRS suggests keeping those records indefinitely. When it comes to maintaining records of student loan payments, car notes, mortgages payments, I would suggest keeping those indefinitely as well.
Collect all of your loose change into one place
In the process of cleaning under the beds, closets, and couches, I found some serious coinage. Before you donate clothes, books, and bags to the Goodwill or Salvation Army, make sure you check all of the pockets, zippers, and pages. I found not only a $50 bill in a book, I came across an old check that I never deposited in a purse. You could use the extra money for savings or fun.
Call in all of the loans you have made to friends and family members
When you are trying to get your money life in order, don’t forget to schedule phone calls and/or visits to those that owe you money. In the spirit of wealth building and gathering accurate data, it is crucial that you close all outstanding loans that you have to ensure a solid financial future for you and your family.
BWMK—Are you getting ready to spring clean your finances? What other tips would you add?
Editor’s Note – This post was originally published on April 2, 2014, and has been updated for quality and relevancy.