It may be hard to believe, but the New Year is rapidly approaching. And with the holidays just around the corner, this is the perfect opportunity to take a few minutes to clean up your finances.
Some people might wait until spring to take care of some financial “spring cleaning.” But spending a little time on your finances every fall can help you make the holidays more financially feasible.
Here are seven different ways you can get a jump start on cleaning up your finances before the New Year is here.
1. Consolidate unused bank accounts
Start your financial cleanup by making a list of all of your bank, credit card, investment, retirement, and other accounts.
Having an account inventory helps you better manage your financial life across different banks and financial institutions.
And, keeping bank and investment accounts open that you no longer use just adds financial clutter to your life. That’s why it’s best to take a little time to close unneeded accounts.
Budgeting tools like Mint and Personal Capital can help you stay organized. And, keep a reliable list of accounts and balances year round. Consider joining one of these while taking care of your account cleanup.
2. Check your credit report
Your credit report is like your academic transcript for your borrowing history, and your credit score is like your GPA.
Checking your credit report and credit score at least annually helps you make sure your credit history is accurate. And, that you are on track for an excellent credit score.
A great credit score helps you get lower interest rates. It can also mean the difference between getting approved or denied for a mortgage loan when trying to buy a home.
Therefore, do everything you can to try to improve your credit score. And don’t hesitate to contact your financial institution or file a dispute at the credit bureaus to remove any inaccurate negative information you may find.
You can get a free credit report annually by law at annualcreditreport.com.
3. Shop around for cheaper insurance
This is a prime example of why it’s important to shop around for auto, renter’s, homeowner’s, and other types of insurance at least every two or three years. Otherwise, you’d miss better bargain deals.
Also, if you enrolled for health insurance through the Affordable Care Act Marketplace, be on the lookout for open enrollment periods. That’s when you can shop around for the best coverage offered through Obamacare and potentially save on premiums if you switch coverage.
4. Roll over your old 401(k)
401(k) fees can rob your retirement accounts of hundreds of thousands of dollars over the course of your career.
However, if you rollover your old 401(k) accounts into a Rollover IRA at your favorite brokerage it’s usually pretty easy and free. And, it will help keep some of those fees in your pocket, rather than the pocket of a plan administrator your old employer chose for you.
Also, don’t withdraw money from an old 401(k) and pay expensive taxes or fees. Roll it over the right way so you don’t pay a cent in the process. And your retirement fund will keep on growing.
And don’t make the financial mistake of not creating your retirement plan when you’re young. It will put you at a huge disadvantage down the road.
5. Max out your IRA and HSA
The good new is you can contribute to a Traditional IRA, Roth IRA, or health savings account (HSA) until tax day in April.
What’s more, Traditional IRA contributions and HSA contributions directly lower your taxes by your highest marginal tax rate. That’s usually 25% for most of us.
The maximum you can contribute for 2016 is $5,500 for an IRA, $3,350 for an HSA for individuals and $6,750 for families. So if you max out your traditional IRA, that will lower your tax bill this year by about $1,375.
A Roth IRA doesn’t help you save on your taxes. However, it does allow for tax-free withdrawals during retirement. That’s why a Roth IRA is better than a Traditional IRA for most young professionals.
6. Make a plan to organize your taxes
Some people have it pretty easy during tax season. All they need is a W-2 from their employer and a 1098-E for their student loan interest deduction if necessary.
Others, however, have a stack of 1098s, 1099s, and other forms to fill out and file on time.
Organizing for your taxes is easy if you expect a simple return. But those of us who have investments, mortgages, children, and side hustles have much more complex taxes.
Listing out the forms you will need to file ahead of time helps make tax prep season a lot easier for you. You’ll have less stress and be able to meet filing deadlines without submitting an amended return.
7. Take action on a financial goal
Think about your number one financial goal for next year. What is one step you can take this fall to help you get closer to it?
Perhaps it’s making an extra retirement account contribution. Or, sending in an extra student loan payment. Maybe you want to finally open a savings account for that emergency fund you’ve been putting off.
Whatever you are trying to accomplish, you have the power to do it better and faster. If you take a positive personal finance action today, your future self will thank you tomorrow.
Interested in refinancing student loans?Here are the top 6 lenders of 2018!
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1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 5.87% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 5.87% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of Month/Day/Year, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 08/21/18. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at firstname.lastname@example.org, or call 888-601-2801 for more information on ourstudent loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
3 Important Disclosures for SoFi.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
5 Important Disclosures for CommonBond.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
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|2.47% – 5.87%1||Undergrad & Graduate||Visit Earnest|
|2.47% – 8.03%4||Undergrad & Graduate||Visit Lendkey|
|2.80% – 6.22%2||Undergrad & Graduate||Visit Laurel Road|
|2.48% – 6.25%5||Undergrad & Graduate||Visit CommonBond|
|2.57% – 8.17%6||Undergrad & Graduate||Visit Citizens|