Feeling overwhelmed by your finances? Staring vacantly at a pile of credit card bills, bank statements, department store bills, and mortgage statements and on and on? We all live busy lives these days and sometimes there are just not enough hours in the day to handle all the financial issues we face. This is especially true if you have a family with children and both you and your spouse work. By the time the work day’s over, the dishwasher’s loaded and the kids in bed, all you probably want to do is crash on the couch and watch a couple of hours of television before heading off to bed.
Take heart. You can simplify your financial life and in just 21 days. Here’s what you need to do.
Cut down on the number of your accounts
We don’t know whether or not you’re average but if you are you have at least four credit cards and maybe more. In fact, if you count up the number of credit cards held by both you and your spouse it could be as many as six or even seven. Then there are your debit cards, investment accounts and savings accounts. It wouldn’t be surprising if you have 15 or even 20 different accounts to deal with every month. When you have this many accounts it just adds complexity to your already complicated financial life. This can also open the door to fraud. There was a survey done in 2012 that found people have an average of 26 different online accounts but only five different passwords. That’s understandable as to how many people do you suppose can remember more than five? But if you mercilessly close accounts you don’t really need or use, you can simplify your life and reduce the odds that you’ll be scammed.
However, when it comes to closing credit cards keep in mind that 30% of your credit score is based on your credit history. When you close credit cards this shrinks your credit history and can have a negative effect on your credit score. You can keep this damage to the minimum by closing the accounts you opened most recently.
For those accounts you keep open, be sure to review your passwords. Research has found that the most popular password is the word password followed by things such as abc123 and 123456. If you have passwords like these you need to create strong new ones. There are sites where it’s easy to do just this. You will probably need to make a list of your new passwords and keep it handy until you have them memorized. But don’t put this list somewhere at work where it would be easy to find.
Cancel (or pretend to cancel) all of your services
Review year recurring expenses by going through all of your spending. Cancel any services you don’t really use. Then pretend you are going to cancel the others by calling up the lender or vendor and suggesting that you are about to cancel. You may be surprised at what they may be willing to do to keep you as a customer. Also, keep an eye out for little things such as that international calling plan you don’t really use. Find 10 tiny expenditures for things you don’t really need and you could save $50 a month or even more. Plus, you will also be simplifying your financial life.
Set aside four or five hours this weekend to rid yourself of everything you don’t really need
If you’re typical you’ve spent the past three, four or five years accumulating a bunch of paperwork you really don’t need. So start with it. Sort everything into two piles – important papers and unimportant papers. Shred the unimportant stuff. Then make two tax files – one for last year and a second for this year. That way when tax time rolls around next year you won’t have to go through a huge pile of documents again.
Be sure to keep everything that would be required to prove or substantiate to the IRS the income you received or any deductions you took. Unfortunately, this means seven years’ worth of tax returns and their supporting documents.
Documents that you could shred include any bank statements that are over a year old, any credit card offers, the convenience checks that you get with your credit card statements, old statements from your broker and your pay stubs — once you’ve double checked your W-2s and paid your taxes.
Plan for this year’s expenses
This may also take some time but you will eventually be glad you did it. What this means is sitting down and making a list of the expenses you’ll have this year so you can set aside funds to pay for them. You know that Christmas will roll around and there will be birthday gifts to purchase. Do you want to take a vacation? There will also be car and home repairs although it’s difficult to account for them because you can’t know how much they will be until they occur. However, you know they will crop up. The best way to handle these expenses is to create a new savings account just to cover them. Once you add up all these expenses you will know how much you’ll need to save. Then divide this by 12 or 24 so you can see how much you will have to put aside every month or out of every paycheck in order to cover them.
Automate everything possible
One of the things that bogs down many people is bill paying. It can be tough to remember the dates all your payments are due and how much is each. You can take a lot of the brain damage out of this by using automatic withdrawals to cover your recurring fixed payments. Your bank or credit union probably offers this service and if not your auto and life insurance companies, cell phone providers and credit card companies undoubtedly do. Sit down for a few minutes, go through all of your bills to identify your recurring, fixed expenses and then set up automatic withdrawals to pay them. Note: Be sure to review your automatic withdrawals at least quarterly to see it they are still correct.
You could also set up automatic withdrawals from your checking account to your savings account or accounts. This can make saving virtually painless because it’s harder to miss money you’ve never seen then when you have to consciously move it from one account to another. If you have a standard IRA or Roth IRA you could automate your payments to it through automatic withdrawals.
Focus on that 21-day “sprint”
The secret to getting your finances under control and simplifying your financial life is to do it quickly. As noted above, focus your attention on a short-term, 21-day sprint. Block out these days on your calendar and use them to work through the tasks you’ve just read. You may find it hard to block out those 21 days but if you do you’ll find the other 306 (or so) days of the year will be much easier to handle – at least financially. As far as your job, your spouse and those kids – well, that’s a totally different matter.
National Debt Relief helps resolve debt for people nationwide who owe $10k+ in unsecured debt. Our experts negotiate with creditors so that clients pay only a fraction of what they owe and can become debt free in as little as 24-48 months. 
