View Full Version : Financial Overhaul
fidgiegirl
11-9-12, 7:58pm
If you were going to do a comprehensive review and update of your financial life, kind of like a "spring cleaning" of finances, what tasks would you include?
I can think of:
- Find the latest statement for every account - every forgotten retirement account, every savings account left open with $10 in it, every loan and mortgage - truly figure out your net worth.
- Review all insurance coverage and call around for new quotes
- Check if a refi is in advantageous for mortgage
- Review your will, or write one and get that squared away
- Close superfluous credit accounts, unless you only have a few and have had them a long time
- Not for everyone, but we'll be doing this one - Move to as much paperless banking as possible. Sick of statements and bills arriving in the mail just to be told they'll be coming out on autopay!
- Review tracking data and look for trends
- Review or write living will/health care directive
- Find all gift cards laying around and gather in one spot. Check balances online and write the amounts on them with a Sharpie. Keep them in mind as needs arise to get them spent up.
- Do all filing, and purge old statements/etc. that no longer are needed.
What else should one consider?
1) consoladate accounts so none are forgotten and you have an approximate mental $$ amount for each one
2) as much as possible, minimize owning stuff that requires insurance
3) give a copy of your will to the people who will most need it if you die unexpectedly
4) live without credit, or only one card and pay off monthly
5) as much as possible, consoladate accounts so fewer paper or e-statements must be reconciled
6) as much as possible, do not use gift cards. Use cash or credit or debit cards.
I think that it is entirely possible for the average person to have one checking account, one savings account (with internal separate categories for things like replacement car, furnace replacement, college for kids) and one credit card.
To me, part of living simply is thinking really, really hard if I need it, want it, just took it 'cause it was free. More and more, the "free" stuff isn't worth the time or effort. I enjoy figuring out a way to "not need" stuff.
Of course, this is from a woman that just spent the last two days (and $50) creating costumes for the Latin Convention: Prometheus (complete with current liver, yesterday's liver and the bird that pecked it out) and a classical Roman lady with under tunic, stolla and pella. Durn, if those high schoolers are not a lot of fun!!
rosarugosa
11-9-12, 8:58pm
Fawn: I would love to see photos of Prometheus and his various livers - now that sounds cool!
Fidgie: Will need to give it some thought, you have a pretty thorough list. Maybe review employer benefits during annual enrollment period and rebalance 401K and other investment accounts? I did have a casual conversation with a couple of my employees today about some of our benefit choices, and I think they might be making some changes.
After gathering all of the statements of obligations and holdings, you might consider starting a summary balance sheet.
On a Word document we list the account numbers and companies where all of our financial instruments are stored. We assign worth to those holdings. We also list all other assets (real estate) and corresponding worth amounts. The entire document is only one page, so it's not a lot of data. The second page lists our net worth every year for the past 15+ years. We tally this up annually. This document would be kept with our will if we had one.:laff:
This is a great list.
Do you have someone outside the house who knows where to find things and has access to your will/papers? I keep meaning to add one of my parents to our safe deposit signature card. Mom and I are always updating each other on where to look for stuff if we rearranage a a file drawer or move it.
try2bfrugal
11-9-12, 9:21pm
That is a good list, Kelli.
I would add to make a detailed budget and then go over it line by line, down to the cost of electricity of every light bulb and PC in the house, to see what you can cut. There are so many things we have saved money on this past year that really didn't require any changes in quality of life we feel pretty stupid we didn't do this 30 years ago. Our electric bill will be 1/3 of what it used to be in the coming months compared to a couple of years ago and that didn't even require turning down the heat. We just insulated the house better, turned off lights more, used more energy efficient light bulbs, actually upgraded a TV, and actions along those lines that didn't hurt our quality of life one bit.
We watch our investments better, too, and pay a lot of attention to service charges, rates of return on every investment option, having the right asset mix and actions along those lines. Again, it didn't change our quality of life one bit just to stay on top of those issues better than we had been doing and eek out a bit higher rate of return than we had been getting before.
We summarize in writing our life, finances and goals in what we call a Life Book. We update at least once a year and discuss its contents. Amazing what reviewing decisions documented from one year or more past shows as far as changes. We have been doing this since the 80s.
We also have goals like "bucket" lists and very approx. when we might accomplish them. We used one author's method of dividing our life into decades and thinking about how our physical limits might change our plans.
Great list Fidgie,
Organize a detailed inventory of what stuff you do have that you would want replaced after a disaster such as Sandy or a fire. Simple photos w/info can be stored in a free DropBox acct or Google Docs, etc..
Fawn mentioned that consolidating to one credit might be a good idea but I think it is better to have at least two. If the one is lost/stolen it takes time for a replacement and you never know what could happen while waiting for the replacemnt. Personal experience shown us it's better to have two.
SteveinMN
11-9-12, 10:56pm
I would think about where you are storing important documents. Paperless is great, but you still need a copy or protection for the one copy you have, be it a safe-deposit box or a fireproof safe or copies of docs located off-premises or scanned documents (this could get quite lengthy) stored in "the cloud" or on an off-site hard disk.
If you have any items valuable enough to require insurance coverage, I would try to get current appraisals of their value and make sure insurance coverage was appropriate. This could include collections, jewelry, computer equipment, specialized hobby equipment, even your car (do you need to carry comprehensive on it?).
In addition to reviewing existing insurance coverage, assess the need for additional insurance -- umbrella policies, your own disability insurance, long-term-care insurance, etc. You may choose not to get any more at all, but at least you have examined the risk of such an event and the cost to address it with insurance.
(Re)evaluate your retirement strategy in light of savings/investment returns, career paths, health concerns, additional monetary commitments (house, child, etc.).
iris lily
11-10-12, 12:16am
Great list Fidgie,
...I think it is better to have at least two. If the one is lost/stolen it takes time for a replacement and you never know what could happen while waiting for the replacement. Personal experience shown us it's better to have two.
I agree, I just recently got a 2nd credit card after decades of having just one. When my account was closed on a fraud alert it took days to get another card.
try2bfrugal
11-10-12, 1:01am
Timely discussion - I just found a fraudulent charge on my American Express card online statement tonight. That is the third time this year I have had to have a card closed out for fraudulent charges. The other two fraud transaction were with Chase and they overnighted new cards, but this Am Ex card place said 5 business days. Monday is a holiday so I am not sure when we will get the new card. I have never had to pay any of the charges but it does mean not being able to use the card until the new one arrives, so I am glad to have a back up card.
At least this time I have a pretty good idea of who took my number since it is new card and I only used it at a few places. One was a mom and pop place that I stopped going to because they tried to overcharge me on a couple of items at the register, so I guess the fraud attempts didn't end when I left the store. I think I will only use the charge cards at major stores from now on and pay cash everywhere else.
Fawn, I second rosarugosa's request for a picture of Prometheus and his multiple and pecked-away livers!
Great lists and suggestions, everybody. My priority right now is to pay off the one credit card balance I have. :(
Great lists - I'm going to take some notes.
The only thing I can think of to add is finding a safe place/method to store online passwords. So many websites have their own requirements for a password (e.g. some need capital letters, some need special characters, etc) that it can be difficult to remember them all. There are password "safe" programs that you can keep on the computer, which open with their own password, but it might also be good to have a copy on paper in a place away from the computer in case of emergency. What do the rest of you think about this?
rosarugosa
11-10-12, 10:35am
Rosemary: I keep many of them written down, but often in kind of my own code. I use certain favorite words, and I can write down just the first letter and know what the word is. My favorite words are also somewhat obscure, or else whimsical word-combinations.
I have the list tucked away with some other important records, but not too far away so it's reasonably handy.
Ther are others that I just have memorized. These tend to be those that I use constantly, so I don't worry about forgetting them.
SteveinMN
11-10-12, 7:56pm
There are password "safe" programs that you can keep on the computer, which open with their own password, but it might also be good to have a copy on paper in a place away from the computer in case of emergency. What do the rest of you think about this?
I've been using 1Password on my Mac, selected largely because it has a good rep and I purchased a license for it as part of an application bundle I bought once (so I really already had it before I was using it). It has a provision for both backing up the file that contains the passwords and to export them into either a 1Password-format file or a text file. Good enough for me. I back it up in more than one location (including locations I can reach in the event of a physical disaster) and I'm done.
I have seen one school of thought for managing passwords that is independent of password applications. The suggestion is to determine a strong passphrase that you then modify simply for each Web site. For example, your passphrase might be "I Love To Live Simply!", which could become the password IL2Ls!. Then customize it appropriately. Maybe for Simple Living Forums, your password becomes SLFIL2Ls! . For gmail, your password becomes gIL2Ls! . For your bank account at Bedford Falls Trust & Savings, your password becomes BFTSIL2Ls! . And so on. The problems there come when you have to differentiate between, say, Amazon and Acme. Or with certain Web sites which force you to change passwords substantially every so often or have different required lengths or non-allowed characters, etc. But it's a thought, and more portable than my password application file even if it's strung around multiple places.
I would add taking a copy of the front and back of your credit cards. In case they are stolen, you can find the correct phone number to call and cancel. Also, do an occasional net worth. I do mine monthly, but annually might be enough.
I do a financial tune up each December to get ready for the new year.
awakenedsoul
11-10-12, 10:12pm
I need to do a lot of this stuff, too. I have two debit cards. I check my account balances on line every day. I have a hand written will, and my important papers are organized. I need to add up my net worth again. It's lower now with this housing market, but I'm glad to be debt free.
fidgiegirl
11-11-12, 11:45am
Birdie, I like the idea of doing it in December. Seems a good time to wrap things up and then get going on any changes themselves in a new year.
Having something like this to focus on in December is a good idea for staying frugal, too, amidst all the sales and urges to spend.
fidgiegirl
11-11-12, 3:37pm
Perhaps we should have a little challenge in December. It is a busy time, but that's what I like about our challenges here . . . no pressure to participate.
Fawn, I second rosarugosa's request for a picture of Prometheus and his multiple and pecked-away livers!
:(
I hope to have it for you all soon. I worked the weekend of the conference....but kiddos have promised me photos...so soon?
Great lists - I'm going to take some notes.
The only thing I can think of to add is finding a safe place/method to store online passwords. So many websites have their own requirements for a password (e.g. some need capital letters, some need special characters, etc) that it can be difficult to remember them all. There are password "safe" programs that you can keep on the computer, which open with their own password, but it might also be good to have a copy on paper in a place away from the computer in case of emergency. What do the rest of you think about this?
My sister, who works as a computer programmer focused on security concerns, recommended Keepass, www.keepass.com. It's easy to use and supposedly quite secure (it's opensource, so people like my sister have picked apart the programming to make sure there's no nefarious code in it). I've been using it for a couple of years now without issue. You can also store both the program and your encrypted password vault on a USB thumb drive so that you can take your passwords with you wherever you go. It also has notes fields for each password record that I use to store the "security question" answers for various sites. Although the notes field isn't encrypted this allows me to make up answers to questions like the name of my elementary school, so no one could reset my password just by knowing a lot about me.
rodeosweetheart
11-14-12, 3:40pm
Fidgie, maybe consider doing the challenge in Jan instead of Feb? I know it would be easier to do after holidays, for moi at least.
fidgiegirl
11-14-12, 6:35pm
Well, I think a challenge already started . . . :) Although I had in mind a challenge to organize the paperwork, but was extremely unclear in that regard! So I'm glad I inspired another challenge for others!
We'll see, the good thing is there can be one every month if we want to, and then whoever is at that place at that time can partake when they need to.
Frugalifec
11-14-12, 10:40pm
What a great topic!! The only think I can think to add that I didn't see was to make copies of birth certificate & passport. Maybe scan and save it. That makes me think of backing up hard drives.
flowerseverywhere
11-15-12, 7:18am
wills have already been mentioned, but what about a health care directive and burial/cremation wishes. You are young and the chances of you needing these is remote but if you are working to be organized in all things these should be included.
Tracking every cent is a good exercise, I don't remember if you already do that. If not I would start Jan 1 and make it a goal for a year.
Another good exercise to do when you are doing taxes is to calculate your real hourly wage. Your gross wage minus taxes and working expenses. It may be very different every few years with changes in life situations, tax situations and once you figure it out, it is much easier to decide if something is worth paying for.
rodeosweetheart
11-15-12, 9:39am
Okay, that's cool. I guess I got overwhelmed thinking of how far behind I am with ALL of these, although I did check my benefits and beneficiaries!!
Like others, I also wanted to say what a good thread this was and how many smart people are in this forum!
We are like a simple living brain trust !!
fidgiegirl
11-22-12, 11:57pm
Well, all, I have made my list of all the financial "stuff" I am going to plan to whittle away at this winter. Some of it will be much easier after the 1st of the year when we will start to receive all kinds of statements, making the net worth calculations easier. I have taken some of the ideas from this list and thought of a few more that weren't mentioned:
- Pull annual free credit reports and review.
- Set up a paperless filing system? Maybe a cloud account to store things? Maybe a new scanner, not a flatbed one (grrr just gets stacked with crap)?
- Ask tax guy which mortgage would be better to pay in an accelerated manner first - the rental or our residence
That's all that's new beyond what was suggested. I am looking forward to it, especially taming the papers!
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