Winter is gone, it’s time to open up the windows and let your home breathe. Spring cleaning is here and this year is the time to clean out more than just that junk drawer. “Spring-cleaning” your finances will help you move into the remainder of the year feeling lighter than ever.
Past bank statements
Springing ahead is only possible if you know what you’re headed towards. Print off the past six months of bank statements and go through them with a fine tooth comb. I know, I know, you would rather go to the dentist office than have to analyze your bank statements, but this is so important. Use highlighters to identify what you’re spending your money on. Sort them by monthly bills, necessities (groceries, gas, personal products, etc.), dining out, entertainment, and misc. Having a visual representation of where your money is going can help you identify where you could cut back.
Eliminate unnecessary fees
Do you pay all of your bills with a traditional mailed check? This can be a great way to ensure that money is being taken out of your account when you want it to be taken out, but it’s also a GREAT way to find your bills past due. Life happens, you forget to mail something and low and behold you’re getting a call that you haven’t paid your bill. Not only does this hurt your credit score, you can end up paying a fortune in late fees. Save yourself some time and money by going automatic. This is most successful if you have set pay dates. Grab a calendar and your bills and note the due dates for your bills and note your pay dates. Most bill and pay cycles are fixed so every month should be similar to the other. Sort which bills you can pay in one pay period and pay the others in the other pay period. Once you have the dates mapped out, call those companies to set up automatic payments. This ensures that your bills are paid on time and gives you the comfort that they everything is up to date.
Don’t forget savings
Same with mapping out your payment schedule, map out how you’re going to add to your savings. Banks offer automatic deposits from your checking to your savings so you can build your savings account without difficulty. Think of this as “paying yourself”. Building up savings accounts takes a lot of patience and self-discipline but having a storage of cash can help you avoid maxing out credit cards.
Inventory of your credit
Every person is allowed an annual free credit report that won’t hurt their score. Since you will be spring-cleaning your finances what better time to take an assessment of your credit history and score. Building up credit scores can take a long time, but it is possible. Find that you have too much outstanding debt in credit cards? Get a full analysis of credit cards that you have and if they are benefitting you. How high is the interest? Can you pay off the balance easily or is it too high? Are your cards consistently maxed out? Reduce the amount of cards you have by mapping out 12 months of payments and cutting them up so you can pay them off. Keep one or two that are low interest for emergencies only in order to stay out the habit of abusing credit cards. Find the entire process overwhelming? Call a credit counseling company that can help you get a handle on your cards and get them paid off without continued collection activity.