March 8, 2012 4:00 am
- Clear the clutter: The IRS requires taxpayers to maintain tax records for all income, deductions or credits claimed on their federal returns for at least three years. For all nondeductible expenses, Helmer says it’s ok to shred statements as soon as payment is posted to your account. Signing up for online statements and paying bills electronically will also reduce paper pileup but create electronic clutter. Be sure to back up all files stored electronically in case of a computer crash.
- Safeguard important documents: Financial documents such as savings bonds, life insurance policies, deeds and property titles and stock certificates should be stored in a fireproof safe or a safe deposit box at the bank. Create an inventory and formally authorize a trusted adviser or family member to get access to the material.
- Organize payments: Gather all recent credit card financial statements and list the amount owed on each one, along with minimum payments and interest rates. From there, establish a plan to pay off one card at a time. Though it's always fastest and most economical to pay off the highest-rate debt first, some people keep motivated by quickly paying off small debts completely, regardless of rate. Set up automatic payments for recurring bills such as car loans, the cable bill and your monthly mortgage.
- Consolidate accounts: Instead of keeping track of multiple credit card bills and statements from several checking, savings and investment accounts, consider which accounts could be closed or consolidated. Bigger investments draw better rates and juggling too many credit card accounts may make it easier to forget about payment due dates, increasing the likelihood of missed or overdue payments. Bear in mind that closing cards can temporarily trigger a decline in your credit rating. Be sure to hang on to your oldest cards as they provide a sustained track record.
- Shop for better interest rates: A little bit of research could net better rates on everything from your mortgage and car loan to your savings account. In comparing interest rates, read the fine print. For example, does a bank require a minimum balance to switch to a higher interest savings account? What are the terms and conditions linked to a zero percent card offer? What are the closing costs associated with refinancing a mortgage to a lower rate? Your credit card company may also be willing to grant an interest rate deduction.
- Assess current investments: Conduct an annual investment review. If you have an investment adviser, make an appointment to review your investment accounts. If you don’t have an adviser, consider hiring one. Your financial institution or employer may make referrals to financial advisers. If you're doing your own search, ask about education and experience as well as their fees. Planners may work on a fee basis, commission or a combination of both.
Published with permission from RISMedia.