Getting your financial house in order
Tax time forces you to think about your finances. How much you earned, how much you donated, how much you owe, or how much Uncle Sam owes you. Before I put my forms away, I always take a moment to think about the year ahead and how my tax situation may or may not change. The exercise is eye opening, and always inspires me to get my financial house in order. A spring cleaning, if you will. What else is on my list of chores?
Clean my cabinets: Our house is small and so is our filing cabinet. That means we have little room for unnecessary paperwork. Generally, the IRS advises you to keep your tax returns forever. Important forms—think W-2s, 1099s, and receipts—should be kept for at least three years.
For all other paperwork I ask myself three questions: When’s the last time I touched it? When will I ever need it? Could I get a copy in a pinch? These days, with online accounts and cloud storage, very few papers meet my “keep” test.
Air my financial dirty laundry: Every spring I check one of my free credit reports, found at annualcreditreport.com. It’s important to look for mistakes and to make a plan for any accounts that are past due and need some cleanup.
Dust off my savings plan: Spring is a good time to brush off the account statements and check on investment performance. If my goals change, I make tweaks to ensure I’m still on track to meet them. I rebalance my winners and losers. And since I qualify for a Roth IRA retirement plan, I always make sure to contribute the $5,000 maximum for 2012. The deadline for 2012 contributions is April 15th.
Trade clutter for cash: Nothing like a few months of being cooped up in my house to want to purge, purge, purge. Whether it’s making a quick buck on Craigslist, trading items on the neighborhood Facebook barter page, or donated items to charity, little makes me happier than finding a home for our unwanted items and seeing the floor in my kids’ rooms again.
Create a financial honey-do list: Actually, make that list together with your partner. Like a list of dream home improvements, it’s good to have a list of financial dreams. Ours are to move into a bigger house, take a warm vacation every year, and have six full months of emergency savings.
Keep up with the cobwebs, not the Joneses: After the Great Recession, our obsession with keeping up with our neighbors financially has somewhat subsided. Still, I have to admit a pang of jealousy when a Facebook friend announces they bought a big new house, or someone else posts photos of a trip to Hawaii. This is when it helps to have a financial dreams list and a plan.
Make that smartphone shine: From budget tracking to mobile coupons to an app that helps me maximize my credit card rewards, my smartphone is loaded with tools that make me a smarter money manager. Take time to browse for some new money-related apps and delete those you never use. A couple of my current free-app favorites? Wallaby is an app that tells me which credit card to use to get the biggest benefit from my reward programs. And TD Ameritrade’s Snapstock lets me learn the latest stock news and quotes about the publically traded companies that make most products in the grocery store, just by snapping a picture of a product’s UPC code.
Count that spare change: Americans have $10 billion in spare change kicking around kitchen counters and hiding in couch cushions. What’s your share of that number? With kids, my coin clutter is mysteriously smaller than it used to be. But life is far richer.
Kara McGuire is a personal finance writer and a St. Paul mother of three. Send comments, questions and story ideas to