20 Moves to Simplify Your Finances Streamline bill paying, credit card usage and more with these useful tips By
Mary Hunt
Posted September 02, 2009
from
Woman's Day; October 6,
2009
Photo:
Getty Images
I know what you’re thinking:
simplify and
finances in
the same sentence? Ha! Like that’s even possible when we have credit
cards, bank accounts, bills, bill-paying options, fees, penalties and
interest rates to keep track of! How can we possibly make our finances
simple? By knowing the right tricks. Choose to become accountable, then
use every tactic you can to streamline—and destress— your financial
life. If you can pare things down in the following areas, you’re well
on your way.
Spending 1. Use cash. When you’re paying
for things like groceries, gas and other routine items, there’s nothing
easier. You can’t overdraft it, and you won’t have to worry about fees
and interest. Once it’s spent, that’s it. Done.
2. Organize with envelopes. I’ve
said it before, but I’ll say it again: This is quite possibly the most
effective money management technique. Get a stack of envelopes and
label one for each of the ways you’ll be spending your cash (“food,”
“gas” and so on). Place the amount you’re going to spend for the week
in each envelope and stash them in a safe place. There—you’ve got a
spending plan.
3. Use a gift card. Most retailers, even
supermarkets and gas stations, offer gift cards these days. Let’s say
you intend to spend $400 for groceries this month. Buy a card in that
amount from your supermarket and use it as you would a debit or credit
card during the month. If you stick with it, you’re guaranteed to stay
on budget.
4. Track your charges, too. Whenever you use a
credit or debit card, take 30 seconds to record that transaction in the
same way you record the checks you write. (That money’s already spent,
right?) Enter it in red ink. Later, when your bank statement or Visa
bill arrives, you’ll be able to quickly double-check the red entries.
5. Put kids on a budget. For
most families, kids plus money equals a big black hole. Bring sanity to
the situation by determining a set amount for each child per month and
making a cash envelope with that child’s name on it. It’s up to you
whether you or the child manages that money. When it’s gone, no more
spending until the next fill-up.
6. Get tech-y The secret to living within your means is to keep track of your spending. At
Wesabe.com,
Geezeo.com or
Mint.com
you can get a clear picture of your finances and create a budget. These
sites are free, but you do need to enter your personal financial
information.
Mvelopes.com, a similar site, offers more privacy and beefed-up features for a monthly fee. Or try software like
You Need a Budget or
Quicken, which allows you to download your information to your hard drive ($40 to $60).
Banking 7. Use direct deposit. If you
haven’t already, arrange with your employer to have your paycheck
deposited directly into your bank account. No more lost or misplaced
paychecks, and the money reaches your account even if you can’t get to
the bank. The real payoff: Many banks and credit unions offer free or
lower-cost checking for customers with direct deposit.
8. Get overdraft protection. If
you overspend your account, your bank or credit union can choose
whether or not they want to pay the amount. If you haven’t arranged for
overdraft protection and they decide to cover your mistake (called
“courtesy overdraft”), you’ll pay $30 or more for each item they cover
plus a daily fee—say, $5 for every day your account is overdrawn. If
the bank chooses not to cover the amount, they’ll charge you $30 or
more, plus the merchant will most likely charge you an additional $25. Overdraft
protection links the account either to your savings account, a line of
credit or a credit card to cover any overcharges you make. You’ll pay a
fee of around $5 to transfer money from your savings to cover the
problem. If you use an overdraft line of credit you’ll also pay
interest, but it will be a lot less than the bank’s courtesy coverage. If
you prefer to put your own overdraft plan into place, keep a secret
$100 or more in your account and exclude it from your current balance.
If you make a careless error in the future, you’ll be covered.
9. Hover online. You
already check your e-mail, Facebook and other sites at least once a
day. Why not add your bank account to the routine? Once you register at
your bank’s site, you’ll be able to get current account information.
Bill Paying 10. Make a calendar. Add bill
due dates to your everyday calendar. That way if a bill doesn’t show up
in the mail for some reason, you’ll still know exactly when it needs to
be paid.
11. Change your due dates. Take another look at
your calendar: Do you want those dates spread out evenly, or would it
be better for them to coincide? You decide, then see if your creditors
will change them accordingly—most credit card companies are happy to
comply. (Be aware that if you carry a balance on your card, pushing the
due date back a few days will result in a onetime adjustment to your
next bill, because finance charges will continue to accrue.)
12. Sign up for auto–bill pay. Many
people already do this with their insurance premiums, utilities,
mortgage and even student loans. They sign a document agreeing to have
the payment deducted from their checking accounts. This does not
preclude the need to manage, check and verify that the amounts deducted
are correct, but it is a good way to make sure your bills are paid on
time. You’ll also avoid paying postage, and you may get a lower
interest rate on your student loan or mortgage (they could knock off
.25% if you agree to set up automatic payment).
13. Pay online. This
isn’tautomatic— here you’re the one making the payment. Instead of using a
paper check, go online to your bank account and pay bills
electronically. The money will be immediately deducted from your
available balance. It’s neat and efficient.
Plastic 14. Slim down your wallet. You
know it can be detrimental to your credit score to close credit card
accounts, but that doesn’t mean you have to carry all that plastic!
Figure out which card you really need to keep with you, then stash the
rest in a safe, secure place. Enjoy the simplicity of using just one
card.
15. Manage store discount cards. Many retailers have
some kind of frequent-buyer club card, which is great…but boy, can they
weigh down your wallet or key ring. KeyRingThing.com
offers a clever way to consolidate up to six of your loyalty cards into
one for free. There’s a quick demo video on the site that explains how
this works. You’ll be impressed.
16. Log on daily. As with
your bank accounts, you need online access to each of your credit card
accounts. Then check them every day. This may take a few minutes, but
that’s the level of care you need to stay well below your credit limit
and to catch any irregularities—like mystery fees, purchases you didn’t
make—before they become a problem later on.
Planning 17. Prep for taxes. If you dread
doing taxes, take away your fear with a handy set of file folders or a
single accordion file. Hang on to the receipts you collect during the
day (jot a note on the ones that might be deductible), then slip them
into the appropriate slots. If you make this a habit, all you’ll need
is about 15 minutes to pull the information together to file your taxes
next year.
18. Make a will. If you haven’t already done
this, stop putting it off! At the very least, you need a will and a
Health Care Power of Attorney (sometimes referred to as a Health Care
Proxy), which authorizes a person you name to make health care
decisions for you if it becomes necessary. And if you have minor
children, you need to name a guardian. It’s a simple process that will
pay back with peace of mind. To learn more, check out LegalZoom.com and
Nolo.com, or make an appointment with an attorney who specializes in end-of-life issues.
19. Scan to CD. Could
you put your hands on all your important papers? Even if you know where
they are, chances are your insurance policies, birth certificates and
tax records are scattered about. Make life easier by taking time to
scan all of your documents into your computer, then store them on CDs.
Keep a copy for yourself and send one to a trusted friend or relative. A
few tech notes first: Be sure to use a desktop, not a laptop— the last
thing you want is for your laptop to get lost or stolen with all of
your personal info on it! And when it comes time to replace your
computer, erase everything first.
20. Eat on the Cheap. This
month your assignment is to create at least ten $5 dinners for your
family. (We’re talking the entire meal, not just the entrée—for $5 or
less for a family of four.) Impossible? Not at all, says Erin Chase,
founder of 5dollardinners.com.
Once you get started, you’ll be surprised what you can make. Do a quick
calculation of how much you normally would have spent for those
dinners, deduct $50 ($5 x 10 dinners = $50) and pop the rest into your
WDSaves savings account. How simple!
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