Tuesday, May 19, 2009

Some Moves Toward Simple

Yesterday after posting a review of Simple Prosperity three posts by Kiplinger showed up in my Google reader on the subject of living simply. Of course I read them. The titles were Simplify Your Life, Online Tools to Help You Simplify Your Finances, and Zap the Clutter. Though these articles are rather generalized there is some good information.

But let’s take a few moments to focus on one are of your life that’s easy to get under control.

And that area is …..

(no peeking)….

(you can probably guess)….

Your Finances! (ta daa)

Okay, money management can be complicated. There is so much to know and so much changes and stays the same, but fortunately more tools are created every year that can help you reduce the amount of space and time you devote to finances. Here’s a short list:
  • Electronic Statements—All financial related companies including your broker, retirement fund, credit card companies and financial institution offer online statements. Now many companies are moving statements online as well. Xcel Energy and most city utilities provide this option. Your statement information is typically achieved as well. Using online statements reduces the amount of paper in your home and is also friendlier to the environment. You won’t have to keep files and boxes for years. It’s all conveniently located and accessible from your computer.

  • Online Bill Payment—Paying bills online is definitely better than writing checks and mailing. Nearly every company offers online payment options. But keeping track of your utilities, cell phone, credit cards, etc. is not simple. To make it easy use one bill payment provider and set up all of your payments online. The nice thing about bill pay is that the payment recipient does not have to setup for electronic payments. You can even pay the babysitter or dentist through this system.

  • Overdraft Protection—Even if you are meticulous about your account balance, set up a real overdraft protection line. Real overdraft protection links your checking account to a savings account, line of credit or credit card. Money is drawn from one of these sources if you write a check or initiate a debit card transaction for more than you have in your account. Some options carry fees, so get the details first.
    Direct Deposit—This is great way to reduce your running around. You never have to worry about fitting payroll deposits into your day. You can even divide the deposit between your savings and checking. Really this is a no-brainer.

  • Account Alerts—Most online banking systems allow you set up personal alerts when your account has reached a specified threshold. For example, you can set up an alert when your savings reaches $2,500. This will remind you to move some of that money to your long-term emergency fund. Or if your checking account dips to $500, an alert could remind you to watch your spending.

  • Move Your Due Dates—If many of your bills are hitting at the same time it could be a drain. Call a few of the companies to have the dates changes so that they are balanced throughout the month.

  • Use a Calendar—Hopefully you’ve already found a system that you like for keeping track of appointments and meetings. Now add your bills to that. Being aware of when things are due will help you manage and avoid things like late fees.

  • Reduce Accounts—Take a look at all of your financial relationships. Are there some loose ends out there? Clean them up:
    ---Roll 401(k)s from previous employers into your current plan or into an individual retirement account (IRA).
    ---Combine IRAs as long as they're the same kind and they're all yours. You can't combine yours with a spouse's, for example, or combine regular IRAs with Roth IRAs -- at least not without serious financial consequences.
    ---Pull together funds from random accounts. Did you leave you the account that you had in college open for sentimental reasons?
    ---Combine taxable brokerage accounts. If you have different goals for the various accounts you have now, you could consider maintaining separate accounts but at least consolidating them with the same brokerage house.

It takes a great deal of discipline to simplify. It’s not something that you can do overnight. By looking at just one area of your life to tone down you can reduce your stress level and your environmental impact. I’ve also found that when I try to make too many changes at once that I am less likely to succeed.

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