We all want to clean up finances and spring gives us a great reason to start this process. No one wants to go through life by winging their finances. This is a recipe for disaster when you do not know the current state of your finances and you are not equipped to handle future situations that can test how well you manage your budget.
There are a lot of frightening things that can haunt your finances and being passive in dealing with money management can bring those fears closer to reality. Just sitting around and waiting for things to unfold might work if you are watching the movies but in real life, your finances will crumble and be unable to sustain your way of life.
Newyorkfed.org shares in a recent report that in the second quarter of 2014, total household debt is already at $11.62 trillion. Mortgage and student loans take the top spot followed by car loans and credit card debt. These are a lot to deal with for a common consumer especially it you throw in the living expenses. The household budget become a handful to deal with.
This makes it even more important to clean up finances because with all the elements that you need to keep track of, you can easily lose track and might miss a payment that can lead to penalties and fees. This can also hurt your credit score and hurt your chances of getting favorable rates from lenders in the future.
Spring cleaning your finances
As spring approaches, it offers a unique chance to clean up finances and get things in order. Here are a few things to help you get started. The better organized your finances are, the better chance you have of making sure that you are able to adapt to whatever changes which might impact your household budget.
- Check how you can clean up your budget. One of the primary things you can do is to revisit your budget and do a spring cleaning with it. One way to do this is to review all details for both income and expense. Make sure that all your income sources are listed down to help you have an overview of your budget because this will be the one thing you will use to cover your expenses. If you have investments, re-evaluate them and see which ones are performing and put more into it to take advantage of a strong passive income. You also need to review your expenses and see which ones are still relevant. You might want to see if you still need those subscriptions to various reading materials or if you can do away with a high cable subscription plan and make do with a few relevant channels.
- Debt consolidation to streamline payments. As you look over and review your expenses with the goal to clean up finances, one of the things you can do is to consolidate your debt accounts. There are myths about debt consolidation but these should not hold you down in considering this program. When you consolidate your loans, you streamline your payments and put more efficiency in the process. You also lower the chances of missing a payment schedule because most, if not all your payments are under one account.
- Compare expenses to get better rates. As you look at your budget, you might want to review your rates and start looking around other lenders to lower them. You can try and start with your existing providers and see if they can lower down your rates. If not, you can start looking for other service providers. This can help you lower down your expenses and clean up finances at the same time.
- Take a look and clean up your credit report. FTC.gov reiterates that consumers are allowed a free credit report every year. This can help you monitor and abate any possible problems with your finances like identity theft. Once you review your credit score and find any inconsistencies like a charge that shouldn’t be there or a debt that has already been paid off, you need to make sure to correct these mistakes to make sure that your credit score is spotless. This can help open better opportunities with lenders in the future like lower interest rates and better loan terms.
- Let go of files that are just accumulating dust. It is a good practice to make sure that you have original documents to help you prove your finances such as income and the payments that you have made. But as you try to clean up finances, you might want to physically clean up your finances as well by getting rid of old financial documents. You might want to keep up to five or ten years worth of documents but if you see that the older ones are just piling up with dust, it might be time to discard them to make space for new ones. One thing you need to remember with discarding financial documents is to make sure that you are able destroy the documents thoroughly. You can use a paper shredder or you can opt to burn the papers. The idea behind this is to prevent identity theft by not letting sensitive financial details out in the open.
How you can take care of your health
As you try to clean up finances, it might be high time as well to look into your inner self and make an honest assessment of your physical health. You need to remember the financial fitness has a distinct correlation with your physical fitness. There are a lot of benefits which your healthy body gives to your finances but how do you get started? Here are idea to consider when you have decided to turn in a new leaf and have a healthy outlook in life.
- Set a definite schedule. It is important to set a definite schedule when you start working out or exercising. Think of it as a meeting that you cannot and should not cancel or an appointment that you cannot get out of. That gym membership will not do you any good and you will only be wasting money if just let it sit there and never set foot inside the establishment. You need to put in the work just like when you are trying to clean up finances in your life.
- You do not have to go big. Once you start and make a decision that you want to live a healthy life, you can start small and gradually increase the intensity of your health regimen. You can put in a few minutes a day to go for a walk or a jog and you can add on from that.
- Adjust to your own body clock. If you are not a morning person,never schedule your workout in the morning because it will only give you an excuse to skip and put it off for the next day. Choose a schedule that works for you whether it be lunch time at the office or a few minutes after everyone else in the house is asleep.
It is tough to try and clean up finances even with spring just around the corner. You need to be dedicated on your of cleaning and streamlining your finances to make sure that you get to see the whole picture and you get to adjust and make informed decisions as you go along.