Clean out your financial closet – Spring Cleaning Finances
This morning, front and center on Yahoo’s home page is the link to “Tidy Up Your Finances” an article by Laura Rowley on Yahoo Finance Six Steps for Financial Spring Cleaning. Although there was little earth shattering about Ms. Rowley’s advice – it gives a nice summary of what should be top of mind for your finances as April 17th looms ahead. My thoughts on Laura Rowley’s six steps to getting your money organized and spiffed up:
1. Calculate your net worth
As someone already in my mid forties with a negligible “net worth” I seem to get discouraged by the articles, blogs and books focused on how to determine your net worth. Instead I put more energy into building my income while efficiently paying off my debt. For those of you that want and NEED to know your net worth keep these things in mind.
The math of determining your net worth. Add up the total sum of your assets. Start with your cash on hand, checking and savings accounts, stocks, bonds, mutual funds, retirement savings,cash value life insurance policies PLUS the resale value of your personal property, including your house, investment real estate, car and other possessions. Once you’ve rolled all your “assets” into one number, determine your liabilities.
Your liabilities include your credit card debt, loans – personal, car and student loans plus your mortgage – pretty much any money you owe. Got a number? Subtract it from your assets to come up with your net worth.
2. Order your credit report
Although you can get a free copy of your credit report, an actual FICO score comes at a price. Again, I’m not a fan of borrowing or credit cards AND I’m not in the financial position to be buying property so my FICO score has less meaning for me. For you – start with what is on your credit report to make sure all the credit accounts listed are indeed yours. Regularly checking your credit report will help you breathe easier knowing the only debt listed is actually YOUR debt. Think – identity theft. It’s real. Once you know the debt listed is debt you incurred, check to make sure the reporting is accurate as far as your payment history and balances. Clear up any discrepencies. This is for your protection and it keeps the reporting agencies more honest.
3. Adjust your withholding
If you are getting back a BIG return or you have discovered you OWE more than you planned on owing the IRS, now is the time to adjust how much is taken out of your paycheck. Most common misconception out there is that it’s good to get a huge tax return each year. It’s not. When we get back a BIG tax return in the spring that means the Federal government had our money for a year and is just now getting it back to you. They don’t pay interest on your money they held all year. Adjust your W-4 so that you will either owe very little OR will end up with a small refund come next year. Let your money work for you – not the government.
4. Review your tax return with your spouse
The only thing I have to say on this tip by Rowley is that I agree with the Dave Ramsey philosophy – once married, it’s OUR money. It’s our debt and yes, it’s OUR taxes. No secrets, no fast talking, no avoiding the subject. Our money, Our debt, Our finances. It’s teamwork and reviewing your tax return with your spouse makes good marriage and money sense.
5. Beef up your insurance records
Preparing for the worse case scenerio – from homeowners insurance to renter’s insurance and life insurance policies – getting them organized and updated is smart. Make sure you have all your important papers in a safe place and don’t keep any of this secret from your significant other because when the time comes – they will need to know where you kept everything. Rowley does offer good advice on documenting for insurance purposes.
Finally…
6. Start planning your summer vacation
I haven’t had a true summer vacation in my life where I took time off as sceduled and went somewhere for a week with or without my family but man, it sure sounds wonderful. I guess I am pretty average because a great number of Americans don’t plan for vacations so they don’t actually go on vacation like they should to avoid burnout and stress. Rowley’s advice is worth putting into action now – start a savings account expressly for your summer vacation – shop around and start planning. If not this summer, get geared up for next summer then work toward it.
Tell me what you think! 
Tam
Tags: debt, finances, loans, money, net worth, savings, spring
