Financial Spring Cleaning
It's that time of the year and spring is here. The birds are chirping, flowers are blooming, and spring cleaning is overdue. Spring cleaning is a great way to de-clutter your home, and give you that great feeling of a fresh start. Donating clothes provides you not only with the satisfaction of helping others, but it gives you more room to breathe. The theory of "spring cleaning" can be applied to many facets of life; I want to explore the methods of how we can clean our finances. Keep reading to find out a few ideas of things you can include in your finance spring cleaning to-do list.
Are you currently renting and looking to buy a home? Do you want to back pack across Europe? Do you have a baby on the way? First you need to know where you are going in order to create the map that will lead you there. Looking at the big picture can help you assess your current situation and help you focus in on the areas that will get you to where you want to go. Analyzing your life is step one.
If You Don't Use It, Cancel It
In your home, this section would be dedicated to your closets and drawers. In our finances, we want to focus on unnecessary expenses—especially if said expenses are on an automatic payment. Sometimes, and I'm guilty of this, we subscribe to things that are seemingly inexpensive and then we tend to forget about them, but our bank accounts don't. That $5 here $10 dollars there, adds up pretty fast and leaves us wondering where all that money is going because we don't remember purchasing anything. Cancel the following examples if you have them and know you are not using them:
- Magazine Subscriptions
- Game Subscriptions
- Beauty Subscriptions/Memberships
- Movie/TV Subscriptions (Netflix/HULU)
Credit
Your credit represents your financial character; now is the perfect time to give it some TLC, starting with credit cards. It's important to make a reasonable plan that you know you will stick to, to pay down your card debts. If you have high balances this task will clearly take some time and strategy; whether it's focusing on one card at a time, or transferring your balance to a lower interest card. Focus on how you can "clean up" your credit card debt. Check out our previous blog on tips for improving your credit score for more ways to clean up your credit!
Reexamine Rates
When was the last time you shopped around for car insurance, cable, phone, or any other similar recurring payment? If the answer is more than 6 months, it's time to reevaluate. You should shop around for these rates at least once, but preferably twice, a year. Don't compare apples to oranges, shopping around can help you make sure you are getting the best deal possible.
Allocate Your Assets
Are you allocating assets the way you should be? Ideally you should have a mix of Stocks and bonds and large-cap vs. small-cap stocks, which are complementary to your age and future goals. If not, now is a good time to re-balance them.
Savings Made Easy
As we get older time seems to pass faster and faster each year. If your savings aren't quite where you thought they would be by this point, a good option could be automating your savings. It is as easy as it sounds; talk to a representative from your respective bank, and ask them to deduct whatever amount you decide from your checking and move it to your saving every month! Your savings account should accumulate at a decent interest rate; if not…find one that does.
Applying these concepts even to just one aspect of your life can make a big impact. If all this talk about cleaning your home has you wondering about whether it’s time for a new one, check out our mortgage calculator to see what kind of loan you may be able to receive. If you have questions about the mortgage process, New American Funding’s Loan Officers are ready to help.