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| The Basics | Spring-clean your finances
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Clear out the dust and cobwebs from your file drawer and your checkbook. It's time to tidy up and make the most of your money.
By Liz Pulliam Weston
For homes, spring cleaning is something of an anachronism. Modern heating methods don't leave behind the accumulation of soot that used to require deep cleaning after every winter.
Your finances, though, are another story. A year of normal spending and investing can leave you with a clutter of accounts, bills, fees, rewards points and premiums that may be making your financial life more complicated than necessary.
In this column, I'll concentrate on ways to tidy up your bill paying, credit cards and rewards programs. In the next, we'll cover insurance, retirement investing and estate planning.
So roll up your sleeves and let's get to work.
First, get it together
If you want to take control of your money, it will help enormously to be able to see all your accounts -- checking, savings, investing, loans, credit cards -- in one place. That's why I'm a big fan of personal finance software, such as Microsoft Money or Quicken, which can track all your accounts and transactions. Another option: online account aggregation, which is offered by many banks, brokerages and Internet service providers, including MSN. (Microsoft is the publisher of MSN Money.)
Many of these programs can alert you when bills are due or when your balances hit certain levels. It can be helpful to know your checking account balance just dipped below $200, for example, or that your credit card balance is approaching its limit.
Take the time to set up your accounts and alerts, then check in regularly.
Related news and commentary on MSN Money
Consolidate
You opened a couple of retail credit cards to get 10% discounts and took advantage of an online bank's $25 bonus for opening a new savings account. Now you've got more statements, fees and hassles than ever. Time to simplify.
Most people can do just fine with one personal checking account, one or two savings accounts and two major credit cards (one for everyday use, the other in case the first one is lost or stolen and you need a backup for the week or two it takes to get a replacement). Just keep in mind these caveats:- Don't close credit card accounts if you're going to be in the market for a major loan in the next year. Closing these accounts can't help your credit scores and may hurt them.
- Keep open your most helpful accounts. Even if you're not loan-shopping and your credit score is high, it makes sense to hang on to the accounts that are doing your scores the most good. These include your oldest credit card and your highest-limit card. Major bank cards (Visa, MasterCard, Discover, American Express) tend to help your scores more than retail cards, so try to keep those major accounts open even if you're not using them -- unless, of course, doing so costs you a fortune in annual fees.
- Consider insurance limits. Keeping more of your money with one bank or brokerage could help you reduce or eliminate account fees. But if you have a lot of money at one place, you could exceed the limits for which your account is insured. The FDIC limit at banks is typically $100,000, although retirement accounts like IRAs and Roths are protected up to $250,000. If your brokerage accounts are covered by Securities Investor Protection Corp., as most are, the ceiling for claims in case of brokerage firm failure is $500,000.
Should you worry if your accounts exceed those limits? The risk of failure at a well-known, well-capitalized bank or brokerage is pretty small, but only you can decide if it's a risk worth taking.
Sign up for online bill payment
It's time to retire your checkbook, if you haven't done so already. Online bill payment through your bank, brokerage or ISP is an easier, safer and more efficient way to pay what you owe, plus it's often free, which saves you the cost of postage. Set up recurring payments for your bills that tend to be the same each month, like your mortgage, rent or student loans, so you have that much less to remember.
Most online bill payment systems offer reminders that will alert you when due dates are drawing near. Make sure to include non-monthly bills, like your semi-annual property tax bill or your annual auto registration.
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