Financial Spring Cleaning

You’ve heard the clichés about springtime: She’s no spring chicken. Fresh as a daisy. Head in the clouds. Chasing rainbows. A ray of sunshine. The start of spring varies, but typically it begins in late March and ends in late June. We embrace springtime; it rightly symbolizes new birth, a resurgence of nature, an opportunity to revive long-neglected New Year’s resolutions, which were tucked away in frigid hibernation until blue skies were able to return. With the arrival of spring comes inevitably the time for spring cleaning. And what better to spring clean than your finances? So, how do you spring clean your finances? How do you prepare your wealth for the summertime? Get out your metaphorical broom and sponges and let’s  get started. 

Sweep Through Your Credit

First up, check your credit report.1 Financial experts recommend checking your credit report at least once a year.2 You should also check your credit three to six months prior to applying for new credit or making a large credit purchase. Checking your report allows you to ensure your credit is in proper order and doesn’t contain any unusual or unsuspected blemishes. The three major consumer reporting companies are Equifax, Experian, and TransUnion. Federal law stipulates that you’re entitled to one free report per year.3 The Federal Trade Commission recommends using www.annualcreditreport.com.4 You may also call (877) 3228228 or mail a completed request form to Annual Credit Report Request Service5, P.O. Box 105281, GA 30348-5281.

The commission also warns to be wary of other sites that offer “free credit reports,” “free credit scores,” or “free credit monitoring.” It states that some providers use that and similar wording as a ploy to lure users into a paid service.6 Reputable providers of your credit report will not send you emails requesting personal information, the FTC states.

Mop Up Your Debt

Excessive debt can put a strain on your budget. Like that mess in the basement, your initial instinct might be to ignore the rising tide of debt. The mindset that by ignoring debt it will somehow disappear leads to more dire problems later. You have to tackle debt now by developing a debt-managing strategy that leads you into the clear. Here are two steps to get you started: First, examine your bills, your regular payments, and calculate how much you owe in total. You can use a bill tracker to help you chart when bills are due.7 Second, if you discover your debt level is too high or that due dates are too close to each other or to payday, you can call providers to request due date changes. You can also see if other payment options are available. The government’s Consumer Financial Protection Bureau8 provides educational resources and the opportunity to file a complaint against unreasonable creditors.

Scrub Spending

Here are some questions to consider involving your spending habits. How are you spending your money? What are using to spend your money-cash or credit cards?

While that credit card may seem easy and convenient to use in the moment, you end up paying the price later when the bill comes due, particularly if you’re not paying off the balance in full every month. Those interest charges have a sneaky way of increasing your debt, and sometimes substantially. While responsible credit card use allows you to build your credit score, misuse and abuse, which are too easy and tempting, wreak considerable long-term damage to your budget and future financial goals.9 Here is the bad news about credit cards: •  They have the greatest impact on your debt with accounts for first-time holders having double-digit interest rates. •  Making just minimum payments on cards often will take years to pay off balances. • You can’t use credit cards to buy assets that appreciate. Real estate and business debt may appreciate in value, but not so with credit cards. Your best bet with credit cards: Make corralling them a top priority during your spring cleaning. Go to the government’s Consumer Financial Protection Bureau for some useful resources to help you better prioritize your money management.10

Spruce Up Savings

After you’ve scoured through your budget, rearranged your debts, and swept up your credit rating, it’s time to roll up your sleeves to find ways to build your savings. Saving money may seem challenging. But following a few easy tricks can produce surprisingly rosy results.

Here Are Some Tips To Get You Moving

  • Set aside money in an emergency fund. Even a $500 nest egg can take you a long way.
  • Stick to your budget. Just thinking about saving won’t do it. You have to commit yourself to it.
  • Put cash in envelopes after paydays or check deposits. Once the money is spent, you have to wait. This helps break the credit habit.
  • Set up automatic transfers at your bank to savings accounts.
  • Shoot for short-term savings goals. How about $20 a week? Or $50? Choose a number and stay with it.
  • Contribute to a retirement account as soon as possible, it’s never too late to start.
  • Definitely use employer matches to retirement accounts.
  • Tuck away bonuses, tax refunds, or other unanticipated windfalls into set-aside accounts.
  • Develop a savings plan. Plans keep you on course to your goals.
  • Stash the loose change. Put it in a jar or other container. It adds up.
  • Wait a day. It’s the 24-hour rule. Use it when you’re contemplating a big purchase.
  • You may treat yourself occasionally. But match what you spend in savings.
  • Calculate how much items are worth in time, rather than in dollars. You buy a $50 item. How long did it take to earn that money?
  • Unsubscribe, unsubscribe, unsubscribe! To all those store emails. It removes the temptation to buy.
  • Stick a “Do I really need this?” label on your credit cards.
  • Pay off credit cards fully (or work towards that goal) each month.
  • Only use your bank or credit union’s ATM. You save transaction fees.
  • Use auto-pay to pay your bills. That way you won’t forget to pay on time.
Spring cleaning can be fun and fulfilling, especially if it involves making your financial life easier and more prosperous. We hope this provided a ray of sunshine to allow you to chase rainbows and lead you down the garden path.

 

1https://www.consumerfinance.gov/about-us/blog/its-not-too-late-springclean-your-finances/

2https://www.experian.com/blogs/ask-experian/how-often-should-i-checkmy-credit-score/

3https://www.ftc.gov/faq/consumer-protection/get-my-free-credit-report

4https://www.annualcreditreport.com/index.action

5https://www.consumer.ftc.gov/sites/www.consumer.ftc.gov/files/articles/ pdf/pdf-0093-annual-report-request-form.pdf

6https://www.consumer.ftc.gov/articles/0155-free-credit-reports

7https://s3.amazonaws.com/files.consumerfinance.gov/f/ documents/201702_cfpb_bill-calendar-OaH.pdf

8https://www.consumerfinance.gov/

9https://www.nerdwallet.com/blog/credit-cards/credit-card-debt-bad-debt/

10https://www.consumerfinance.gov/about-us/blog/easy-rememberguidelines-help-people-reduce-credit-card-debt/

11https://americasaves.org/for-savers/make-a-plan-how-to-save-money/54ways-to-save-money

 

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