360° Coverage : 5 Fearless Ways To Simplify Your Finances In 2014

2 Updates
5 Fearless Ways To Simplify Your Finances In 2014

5 Fearless Ways To Simplify Your Finances In 2014

Jan 10 2014, 10:42am CST | by

The first of the year can be overwhelming for many people. Even with the best of intentions, people overspend and are left with credit card bills to pay off. We go into the season confident we can...

Filed under: news

 
 
 

35 weeks ago

5 Fearless Ways To Simplify Your Finances In 2014

Jan 10 2014, 10:42am CST | by

The first of the year can be overwhelming for many people. Even with the best of intentions, people overspend and are left with credit card bills to pay off. We go into the season confident we can stick to a budget but fall short when push comes to shove.

According to research by Hersh Shefrin, author of “Born to Spend: How Nature and Nurture Influence Borrowing Habits,” about 98% of holiday budget-setters he surveyed felt confident that they would be able to stick to their budgets. Well, it turns out that many were mistaken: 36% admitted to overspending when he followed up. That’s quite a disparity.

Add to that the sheer amount of paperwork that hits our mailboxes in January.

So how do you avoid feeling overwhelmed? Simplify and plan ahead. Take the next three weeks—21 days—to clean up and clear out the old, and plan your 2014 so you don’t end up in the same situation next year.

Here are five ways to fearlessly simplify your finances:

1. Get rid of everything you don’t need.

Start with paperwork; keep important papers and shred everything else. Make two tax files: One for 2013 for all of the important tax documents you receive in January and another for 2014 (so you don’t have to sift through a sea of paper again a year from now).

Keep anything you’ll need to substantiate or prove to the I.R.S. (or anyone else for that matter) income you received or a deduction you took such as:

  • Seven years’ worth of tax returns and supporting documentation (The I.R.S. can audit you for any reason for up to three years, but if they suspect you under-reported income, they have up to six years)
  • Records of anything that is active, such as a contract
  • Records for the sale of an investment, such as a home or stock until the relevant period of limitations expires or the year in which you sell them
  • Home improvement records for at least three years after the asset is sold
  • Disputed bills

Shred these documents:

  • ATM receipts once the transaction appears in your account
  • Any bank statement over a year old.
  • Any quarterly investment statements after you receive the year-end statement (Better yet, sign up to receive your banking and investment statements online so you never get paper in the first place)
  • Credit card offers (Or, even better, opt out!  Go to www.optoutprescreen.com or call 1–888–567–8688 to opt out for five years or permanently)
  • Convenience checks that come with your credit card statements (Or choose online statements, so you aren’t tempted to use them, or so there isn’t the danger they will get stolen and used)
  • Pay stubs after you’ve double checked your W-2 and paid your taxes. (Better yet, have your employer store them electronically for you)

(note – this is not intended to be tax advice.  Please consult your tax specialist for guidance specific to your situation. )

2. Pare down your accounts to what’s most important.

Though the average number of credit cards (for people with at least one credit card) in the U.S. rounds up to 4 per person, according to creditcards.com, I’ve seen couples with five or six credit cards between them. Add debit cards, savings accounts and investment accounts, and you can easily have 15-20 different accounts to deal with.

Multiple accounts add complexity to an already complicated financial life and can open the window to fraud. According to research from Experian, in 2012, people surveyed had an average of 26 different online accounts but only 5 different passwords. Who can remember more than 5 passwords? By ruthlessly closing accounts you don’t use or don’t need, you can greatly simplify your life and increase your fraud protection.

Keep in mind that the length of your credit history can have a positive effect on your FICO credit score. So if you do close accounts, close the most recently opened ones.

For the accounts you do keep, be sure to do a password audit! According to SplashData, the most common password is “password,” and “abc123” is in the top five. When it comes to your financial security, these just aren’t going to cut it. Create a really strong password instead – here is a resource from ConnectSafely.org.

3. Cancel all of your services (or at least pretend to).

Go through your bank and credit card statements to review all of your regular recurring expenses. Cancel any that you don’t use and pretend you’re going to cancel the others by calling up the vendor and bringing up the possibility. See how they entice you to stay.

My son did an audit of my cell phone bill a couple of years ago and asked me why I had an international calling plan for $5.95 a month. I thought we’d cancelled it after my husband returned from an overseas trip two years prior! Little things add up, and in my case, $6 turned into a wasted $150. Fearlessly cancel everything you don’t use and negotiate a reduced rate on what you do.

/>

4. Plan your finances for the year.

Review upcoming expenses and set aside funds for them. Every December, the holidays roll around, every year you have birthday gifts to purchase, and you may want to take an annual vacation. You also have home and car repairs, and although you don’t know the exact dollar amount, you can count on them to crop up. Use one of your existing savings accounts or add a sub-account for these expenses so you are prepared for them.

5. Automate everything you can.

 Choose an amount you know you can commit to putting away each month, and set up an automatic transfer from your checking to your savings account. Consider increasing your retirement contributions from your paycheck if you haven’t reached the maximum. If you invest in a Roth IRA, don’t wait until the end of the year—set up a manageable automatic investment from your checking account. Put your regularly recurring bills (at least the fixed ones) on auto-pay so you never miss a payment (review them regularly, however, to make sure they are correct). If you have recurring charges on a credit card, like a gym membership, set up an automatic payment so you never miss it by mistake.

The key to getting these things done is to do them quickly—focus on a short term, three-week “sprint.” Put the date on the calendar and celebrate when you reach it!

My husband and I set a deadline today to update our budget and our personal escrow accounts. This morning, while he was getting ready to go out, he remarked, “I’ve got a really busy day today.” I replied, “It’s going to get even busier since we made a commitment to update our budget by end of day today.” He saw the look of quiet calmness and determination on my face and smiled back at me. His (very wise) response was, “Sounds good.”

How to Take Control of Your Finances

Nancy L. Anderson, CFP ™ is a fee-only financial planner with LearnVest Planning Services and a blogger for Deer Valley Ski Resort. Company website is LearnVest.com (use code Retire50 for a discount).  Follow Nancy on Facebook – Twitter.

The opinions expressed are those of the author and may not be the views of LearnVest Planning Services LLC (“LVPS”), a registered investment adviser. The advice provided is not personalized investment or tax advice, may not be suitable for your individual situation, are not guarantees of future performance and may differ materially from actual events that occur.  The author and LVPS are not endorsing, sponsoring or responsible for errors or inaccuracies by the unaffiliated third party sources and links identified herein on which the author reasonably relies. 

Source: Forbes Business

 
Update
2

2 weeks ago

Khazanah throws MAS RM6b lifeline

Aug 29 2014 5:01pm CDT | Source: Business Times Singapore

August 30, 2014 1:15 AMKHAZANAH Nasional will inject RM6 billion (SS$2.4 billion) over three years to resuscitate loss-making Malaysia Airlines (MAS) under a recovery plan that includes even an Act of Parliament. Other key moves are migrating its operations, assets and liabilities to a new company (NewCo) and slash ...
Source: Business Times Singapore   Full article at: Business Times Singapore
 

 
Update
1

2 weeks ago

MAS posts loss of RM307m for Q2

Aug 28 2014 5:00pm CDT | Source: Business Times Singapore

August 29, 2014 1:13 AMMALAYSIA Airlines (MAS) registered a loss of RM307 million (S$122 million) for the second quarter to end-June, but warned of worse to come in the second half when the "full financial impact of the double tragedies of MH370 and MH17 ...
Source: Business Times Singapore   Full article at: Business Times Singapore
 

 

Don't miss ...

 

<a href="/latest_stories/all/all/30" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

blog comments powered by Disqus

Latest stories

US to bolster Ebola fight with more funds, troops
Washington, Sep 16 (IANS/EFE) US President Barrack Obama will announce Tuesday an extension of his government's plan against the Ebola virus disease outbreak in West Africa by deploying 3,000 troops and allocating fresh funds that could reach $600 million.
 
 
A glass of milk daily good for your heart
New York, Sep 16 (IANS) Do you find drinking milk disgusting? Listen to your heart and change the habit. New research has found that drinking milk and consuming other dairy products may reduce the risk of a heart attack.
 
 
Number crunching may make people selfish
Toronto, Sep 16 (IANS) People with a "calculative mindset" as a result of number crunching are more likely to engage in selfish and unethical behaviour, suggests a study.
 
 
A novel way to spot dyslexia in kids
New York, Sep 16 (IANS) There could soon be a tool to spot kids at risk of developing reading difficulties before they experience the challenges as researchers have found that white matter volume in the brain is key to development of reading abilities.
 
 
 

Latest from the Network

US to bolster Ebola fight with more funds, troops
Washington, Sep 16 (IANS/EFE) US President Barrack Obama will announce Tuesday an extension of his government's plan against the Ebola virus disease outbreak in West Africa by deploying 3,000 troops and allocating...
Read more on Business Balla
 
Kiwi jihadi wants to leave war-torn Syria
Wellington, Sep 16 (IANS) A jihadi from New Zealand, who has links with the Al Qaeda and has taken up arms in Syria, wants to leave the war-torn country - but first needs a fresh New Zealand passport after burning his...
Read more on Politics Balla
 
A glass of milk daily good for your heart
New York, Sep 16 (IANS) Do you find drinking milk disgusting? Listen to your heart and change the habit. New research has found that drinking milk and consuming other dairy products may reduce the risk of a heart...
Read more on Apple Balla
 
Avatar sequels could feature cutting-edge 3D technology
The 'Avatar' sequels could use Douglas Trumbull's new system for 4K 3D at 120 frames per second. Trumbull has confirmed the news in an interview with The Hollywood Reporter, in which he revealed that James Cameron - who...
Read more on Movie Balla
 
Marvel releases synopsis of Avengers: Age of Ultron
Marvel Studios has released a full synopsis of 'Avengers: Age of Ultron'. The much-hyped film is set to feature the likes of Robert Downey Jr., Chris Evans, Mark Ruffalo and Chris Hemsworth. The synopsis of the film...
Read more on Movie Balla
 
Keira Knightley was neurotic
Keira Knightley was ''pretty neurotic'' until she was 25. The 29-year-old actress used to take herself ''far too seriously'' and obsessed over the criticism she received, particularly over her looks. She said: ''Have I...
Read more on Celebrity Balla
 
Lawyer: Robin Thicke is being 'exploited'
Robin Thicke's lawyer believes the singer is being ''exploited''. The 37-year-old star is currently embroiled in a legal dispute with Marvin Gaye's children, who have accused him, Pharrell Williams and Clifford 'T.I.'...
Read more on Celebrity Balla
 
Rain takes toll on Pakistan's historical sites
Islamabad, Sep 16 (IANS) Pakistan's monsoon rain, which started Sep 3 and has ravaged human populations since then, has taken a toll on ancient ruins as well, media reported Tuesday. Archaeologists say the ancient...
Read more on Politics Balla
 
Number crunching may make people selfish
Toronto, Sep 16 (IANS) People with a "calculative mindset" as a result of number crunching are more likely to engage in selfish and unethical behaviour, suggests a study. Repeated engagement with number-focused...
Read more on Celebrity Balla