To print article, click Print on your browser's File menu. Go back   How much can you really save? Assess your spending style Financial resources at MSN Shopping 60% Solution Budget Calculator Do your taxes online Find It! Article Index Fast Answers Tools index Site Map Recent articles by Liz Pulliam Weston: • The penny-pinchers guide to theme parks, 4/9/2006 • So you want to be a millionaire, 4/2/2006 • Pay tomorrow's tuition at today's prices, 3/29/2006 More...		The Basics Spring-clean your finances 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. Looking for a loan? Check out MSN Money's Loan Center 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 • Leave your ATM card at home • How to build your first budget • 50 ways to trim your budget • Are your vices killing your finances? 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. Review your bills Telecom and cable companies are battling for your business, so it can pay to review your cell, landline, long-distance, Internet and pay television bills at least once a year to see if you can find a better deal. Start by seeing how well your current choices suit your life. Do you regularly watch those premium channels you're paying extra for? Are you using more or a lot less than your monthly allotment of cell phone minutes? Do you still even need a land line, or could you substitute a cell phone or investigate Internet calling? (For more details on the latter, see "Time to ditch your land-line phone for VoIP?") Once you have a better idea of your needs, you might check with a Web-based comparison shopping service like LowerMyBills.com to see if you can get a better deal on individual services. Also, check with your providers to see if they can offer you a better plan for one or more services. Many telecom and cable companies are offering bundles that combine phone service, high-speed Internet access and cable or satellite television, sometimes for substantial savings. The deals vary, so see what your providers -- and their competitors -- have to offer. Clean up your credit First, get your credit reports. You're entitled to free annual reports from each of the three major credit bureaus, which you can view online at Annualcreditreport.com. Dispute any serious errors -- accounts that aren't yours, or negative marks that are older than seven years (or 10 years for bankruptcies). Then, review your rates and terms. If your credit score is good -- FICOs of 720 or above --your credit card interest rates should be in the single digits, said Curtis Arnold of CardRatings.com. If they're higher, contact each card issuer and ask for a better deal. If your credit is poor, make a plan to improve it -- by paying bills on time, paying down debt and using credit responsibly. You'll find a host of articles on how to improve your credit scores at the MSN's Decision Center on credit. Also, if you've paid even a single late fee this year, you may want to consider setting up an automatic debit to make sure at least the minimum gets paid on time. If you carry credit card balances, rewards cards usually aren't the best choice, since their interest rates are typically high. Better to concentrate on getting the lowest rate possible and make a plan to pay off your debt. If you pay your bills in full every month, though, you should be earning some additional benefits, like cash back or other rewards. Just make sure they're the right rewards: Airline rewards aren't a good deal for most. When they first appeared, credit cards that offered frequent flier miles seemed like a great deal. Unfortunately, financially strapped airlines have been making it harder for most people to use their miles for upgrades or free flights. Elite frequent fliers still can get priority access to first-class seats and free tickets on their preferred airlines, but less frequent fliers might want to explore other rewards. Hotel rewards might be a better choice for travelers. Hotel chains tend to be a lot more flexible than airlines about redeeming rewards points, said Randy Petersen, publisher of Webflyer.com. You may be able to convert your frequent flier miles to hotel points, or you can apply for a card that's affiliated with a major chain, like the Hilton Honors Visa Signature card or the Starwood Preferred Guest card. Otherwise, stick to a good cash-back card. Arnold of CardRatings.com recommends the Citibank Dividend Platinum Select card for "light" chargers and the American Express Blue Cash card for heavier users. The Citibank card offers 5% cash back on "everyday purchases"-- meaning grocery, gas and drugstore purchases -- plus 1% back on other purchases, but puts a $300 annual cap on rebates, which you'd hit after $6,000 in grocery, gas and drugstore buys. Liz Pulliam Westons newsletter Get the latest from Liz Pulliam Weston. Sign up to receive her free weekly newsletter. Your e-mail address:   Learn more about newsletters   The American Express card, meanwhile, has a tiered structure that means you don't get the maximum cash-back benefit until you charge at least $6,500 a year. Once you're there, though, you get 5% cash back on grocery, gas and drugstore purchases and 1.5% back on everything else. Maximize your rewards "Earn and burn" is the mantra of smart frequent fliers and should be yours when it comes to any kind of reward program. Concentrate your spending on the credit card that gives you the best rewards, while being careful to protect your credit scores by not using more than 50% of your credit limit at any time. (If that's a problem, ask your issuer for a higher credit limit or pay your bill a few days before your statement's closing date to minimize the impact on your credit scores.) If you're also earning rewards through an airline or hotel chain, try to book most of your travel through those programs. Keep track of your rewards. Most rewards programs will notify you by e-mail once a month or so of your account balance and any special promotions that could allow you to earn extra rewards. If you've got a lot of these accounts, you might consider using a paid service like MaxMiles ($29.95 a year with a 90-day free trial) or MileageManager ($14.95 with a 30-day free trial) to keep track and to alert you to special deals. Or check with your bank or brokerage, some of which offer reward-program tracking as part of their account consolidation services. Cash in your rewards frequently. Some cards, like Blue Cash, automatically credit your account, but most require some action on your part. Don't let your rewards languish too long, since card issuers, airlines and other reward givers can change the terms at any point to make benefits harder to get or redeem. Rescue orphaned miles or points. You may have switched airlines or credit cards, but you shouldn't let your rewards from the old program expire unused. In some cases, you can transfer your benefits. I recently rescued 15,000 points from Continental's OnePass program, for example, by transferring them to my Amtrak Guest Rewards account. The 15,000 flier miles were useless to me, since I no longer fly that airline, but with Amtrak we can score a sleeper car bedroom on the Los Angeles-to-Seattle route, something that would otherwise set us back more than $300. If we decide not to ride by rail, I could transfer the same points yet again to my Hilton Honors account, which would double their value to 30,000. That would get me a free night or two at one of the chain's hotels, depending on what specials are running. You can use the mileage converter at Webflyer.com to explore the possibilities, or check with the reward program's Web site. At the very least, you should be able to trade your orphaned rewards for magazines, gift certificates or discounts on merchandise with affiliated stores, although your exchange rate might not be great. Currently, for example, you can trade 26,738 Alaska Airlines Mileage Plan miles for a $50 Amazon.com gift certificate through swap site Points.com -- an exchange rate of less than .2 cents a mile. That's far less than the 1 cent to 2 cents frequent flier experts say your miles should be worth, but it may be better than nothing. Liz Pulliam Weston's column appears every Monday and Thursday, exclusively on MSN Money. She also answers reader questions in the Your Money message board.
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