Clean Up Your Finances While Stuck at Home for Social Distancing
By now you're probably Netflixed out, so quit binge watching and take this opportunity to get organized and on track.
While you didn’t plan it this way, it looks like spring cleaning will be happening while we all spend a lot more time at home due to social distancing. Allow us to make a suggestion: Make the most of the extra time you have on your hands.
It’s the perfect opportunity to not only organize and declutter your home, but also give your finances a little extra love. It might even relieve some stress to be proactive and gain a better understanding of your financial situation.
Here are a few ways to use this time wisely and bring clarity to your finances.
Cut Down on Financial Clutter and Documents
There’s a reason why we often put paperwork off as long as possible — it seems like a daunting task! But just think of how you’ll feel when it’s all done! Shredding old bank statements, pay stubs and anything that has your personal information on it from more than two months ago is a great place to start. This decreases the risk of identity theft, frees up extra space, and allows you to find important documents much faster. The majority of banks, credit unions and employers keep a digital file of all these statements should you need them for any reason.
Paper documents related to investments, home improvements and taxes should be kept for seven years. Use the following link to find more details on what records to keep and for how long.
Do a Credit Check
Did you know you can access your credit report for free? You can get three free credit reports a year from AnnualCreditReport.com and a free TransUnion and Equifax report once a week from CreditKarma.com. Unlike some free credit reporting options, these are accurate records of your credit from three national credit bureaus. Whether you have great credit or you’re a little nervous to check your score, the important thing is that you are staying informed.
Doing all your banking, shopping, vacation bookings and investments online are great for convenience, but having that personal information transmitted through the internet means you’re more susceptible to cyberattacks and identity theft. As a result, there is a higher chance that someone could obtain that information and start using your credit without you being aware of it. So even if you know the exact balance and interest rate from every creditor you pay, staying on top of your credit reports will alert you to any suspicious behavior before it’s too late.
Review Your Interest Rates and Create a Budget
If you want something, sometimes all you have to do is ask. Give your creditors a call to see if they can lower your credit card interest rates. If that doesn’t work, consider consolidating to a 0% interest rate credit card and transfer the balance so you can pay off the debt faster. Also, look at refinancing any vehicle loan you have to pay off the debt faster or decrease the minimum payment so you can put more toward your emergency fund.
If you haven’t used a budget before, a few easy-to-use budgeting apps to choose from are Mint, PocketGaurd, GoodBudget (multiple users can access the same account) and YNAB (You Need a Budget) or EveryDollar for zero-based budgeting. Some of these are free or have options to upgrade to a version that enables your banking to be automatically synced with the app. This way your expenses are imported into the app, allowing you to quickly assign expenses to all your budget categories without manually importing anything.
Finish Your Cleanup
Now that you are completely aware of your finances and where things are when you need them, you’ll experience added peace of mind — at the perfect time.
Advisory services through Retirement Wealth Advisors Inc. (RWA), a SEC Registered Investment Advisor. Strong Tower Associates and RWA are not affiliated. This information is designed to provide general information on the subjects covered; it is not, however, intended to provide specific legal or tax advice and cannot be used to avoid tax penalties or to promote, market or recommend any tax plan or arrangement. Please note that Strong Tower Associates and its affiliates do not give legal or tax advice. You are encouraged to consult your tax adviser or attorney.
About the Author
Ash Toumayants, Investment Adviser Rep
President and Founder, Strong Tower Associates