Spring cleaning is the time for a new start. While you are spring cleaning your house, it is the perfect time to spring clean your finances as well. It’s time to put the mishaps of the past year behind and move forward with new financial goals. Here are some ways to help spring clean your finances and be prepared for a healthy bank account, and retirement.
Check on Your Debt
Many people have a goal to pay down their amount of debt, so if this is you, now is a good time to determine how much debt you have paid off. This will motivate you to continue on your debt-free journey to freedom. If you aren’t on this journey, this is a good time to see how much debt you have accumulated, meaning all debt, so your car loan, credit cards, student loans, or maybe that new bedroom set. Make sure that your debt to income ratio isn’t too high so that your credit score won’t be effected.
Most of all, don’t beat yourself up if you made mistakes. Consider it a lesson learned and revamp a new plan to either attack the debt or keep the debt level at a safe ratio.
Redo Your Budget
Spring is a great time to check out your common spending and if the current budget is working, so if it isn’t working, this is the time to figure out why. Is there an area you are consistently going over budget? Take time to plan out a new budget, and stick. to. it.
If your current budget has been working for you, you can decide if you are able to add a bit more to savings or your retirement portfolio. During this time, you should look ahead at the upcoming year and start setting aside money for Christmas, birthdays and bigger purchases.
Work on Retirement Portfolio
During this spring cleaning time, you should look over your retirement portfolio. Because everyone needs to have a diverse portfolio, consider whether or not there is a new way to invest your money, such as a self-directed IRA. Look at the budget plan and plan to try to increase your retirement contributions, even if it’s just a small increase. Compound interest is a wondrous thing.
A self-directed IRA allows you have more access to a range of alternative investment options, and they can earn you a bigger profit than a normal mutual fund.
Reconfigure Your Saving Plans
Savings should be a priority for everyone. If you don’t have an emergency fund, then that is something you need to set on your list, a good rule of thumb is that your emergency fund needs to amount to 6 months worth of bills, so if you pay $2000 a month on all your bills, then your emergency fund needs to be at least $12,000. It sounds like a lot, even too much, but what will happen if you get laid off, and can’t find a job for 4 months? No worries, you’re covered. Everyone needs to have money set aside for potential job loss, or even an emergency room visit.
Check Your Credit Score
Everyone should know their credit score. It helps lenders determine who to lend to, either for a car loan, a mortgage, renting an apartment, or even to purchase an iPhone. One of the biggest reasons that it’s a necessity is because it could be inaccurate, and if it’s inaccurate, then you could end up with a higher interest rate, or may not get approved for that new car you need. Services like Credit Karma help you monitor your credit, dispute inaccuracies, and have suggestions on how to build your credit in a productive way. One rumor we want to bust is the rumor that checking your credit is bad for your credit. This is not true. What does impact your credit is the number of inquires, so if you apply for a credit card, or a lower auto loan interest rate, the lender will run your credit, and that is what can negatively impact your score if it’s run too frequently.
Organize Financial Documents
After filing taxes, you should take time to go through your financial documents, and these should be kept in a safe place for future references. A new popular and space-saving idea is to save all the documents digitally. Most banks archive your bank statements, but you may way to digitize them as well for future references. Clean the area in your house that you write your bills and make the area well-organized for a streamlined
process, and while you’re at it, shred any old bills or statements, and opt in for paperless billing.
Spring time is a time for regeneration and growth. This is the perfect time to look at your financial goals and determine which ones are helping you to prosper, so take time now to get your financial health in order, and set new goals to work towards.
Post sponsored by Accuplan.