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Before doing a deep dive into your financial situation, you need to get organized. Spend the next five days throwing away old documents, organizing the clutter, and getting a clearer picture of where you stand. These aren’t huge changes, but they are small tweaks that will set you up for big success in 2016.
My wallet is an embarrassment. It’s overflowing with receipts, crumpled twenties, old ticket stubs, and a bunch of gift cards I never use. I’m always annoyed when people say “a cluttered desk is the sign of a cluttered mind,” (you don’t want to see my desk), but the adage “a messy wallet is a sign of a messy financial life” might be kind of true.
Today, clear out your wallet (and also your handbags). Spend those old gift cards (take advantage of the after-Christmas sales) or turn them in for cash at Cardpool. Organize your receipts and throw away anything unnecessary. It will probably only take you 10 minutes, but you’ll really appreciate the difference right away. Who knew paper could be so heavy?
And make a pact with yourself that you’ll start regularly clearing out your wallet in 2016. In week 4, we talk about making a weekly money date with yourself. This can be the perfect time to organize your wallet and make sure it doesn’t get back to such a state of disarray.
Bonus: Turn in your loose change for cash. Nearly everyone has a jar overflowing with pennies and nickels just sitting around collecting dust. Time to turn it in for quick cash. TD Bank and PNC both offer free coin counter machines at some locations for customers (and charge non-customers a nominal fee). You can also use CoinStar, which has locations all over the country. It charges a fee as well, unless you choose to turn your change into gift cards — or donate to a charity. Take this money and deposit it into your savings account. It’s a little bump to start the month!
Really, you should have done this years ago. Who gets paper statements anymore? (Yes, shaming you a bit here.) If you’re still getting mail from your electric or cable company, it’s time to make the switch. It’s much easier to track bills when they’re not piling up on your coffee table. It takes about five minutes to login into your account and click the button that says “Paperless” or “Electronic Billing.”
While you’re at it, set up automatic payments for bills that are always the same amount each month. If you’ve got a set rate for cable, or your water bill rarely surprises you, go ahead and have them automatically deducted from your bank account each month. You’ll still want to manually pay credit cards, phone bills, and anything else that has a tendency to fluctuate from month-to-month, so you can make sure the charges are correct.
I have tax returns dating back to 2003. My parents, until recently, had tax returns dating back to their first year of marriage — in 1969. My dad used to joke that the Smithsonian might want them one day. Sorry, dad, the Smithsonian doesn’t want those old forms and neither should you.
If you’re still holding onto these old documents, it’s time to shred them. Priya (and the IRS) suggest that you only need to keep the past two returns. The rest can go. Grab your shredder and get going. I’m sure you can use the extra closet space for something more interesting than old paperwork.
I feel about budgeting apps the way I used to feel about new notebooks: I love them. (Actually, I still love notebooks, but that’s a different story.) Want a clearer picture of your finances? There are about a billion different apps for that. Priya recommends Level Money (which focuses on your day-to-day budget) or Mint (which gives you an overall picture). If they’re not quite right, you can also try Mvelopes or You Need A Budget. Or, go old-school and use an excel sheet to track everything. (Hell, use one of those shiny new notebooks.) It’s not what system you use, but how you use the system to your advantage. The point here is financial clarity, and these apps can help you achieve those goals.