Spring is one of my favorite times of year because it naturally exudes the ideals of strength, renewal, and determination (if you need proof of this, just look at those lovely tulip bulbs breaking through the surface of your garden).

Additionally, spring affords many opportunities to eliminate clutter, organize, and reinvigorate your progress towards any annual goals you may have set. While I love me some good floor scrubbing, gutter cleaning, and window washing action, I also use “spring cleaning” as a reminder to do the following for my finances:

Be your credit report’s best friend

By now, I hope you’ve all heard of–and have used–annualcreditreport.com (not to be confused with the credit monitoring service gypsies of freecreditreport.com!). Ideally, you should be pulling your report at least once per year from all major bureaus: Equifax, Experian, and TransUnion. Once you pull the free reports, analyze them! Check for mistakes and file disputes ASAP.

Also, if you’re planning to make any large purchases in the next 6-12 months, it’s not a bad idea to pay to get your credit score as well. While the number changes regularly, having a benchmark will help determine your potential loan rates, etc.

Organize your heart out

Files, envelopes, shoe boxes. Whatever your organization style, make sure you have some way to easily store your important financial documents–and in a way that affords easy access. The last thing you want is to be in a rush while needing a document and have absolutely no clue where it is. I prefer a small file box in my closet that’s organized with tabbed dividers for categories such as home, health, taxes, car, etc. A general system for organizing your finances includes a category for:

• Monthly bills, bank statements, and pay stubs
• Tax returns & supporting documents
• Investment-related documents
• Warranties/User manuals
• Policy documents and deeds
• “Forever” documents (marriage certificate, birth certificate, etc)

 

Minimize your impact

For ease of organization and quick reference, consider digitizing as much of the above as possible. Only do so after ensuring that all accounts are password protected and you’ve gotten in the habit of monitoring/checking them regularly. Additionally, now is a great time to go through your wallet and/or purse to remove unnecessary items: limiting the amount of plastic you carry will help minimize threats of identity theft as well as help minimize spending/allow you to keep better records of your spending by only having a limited number of transactions & accounts to monitor.

Know when to hold’em….AND when to fold’em

Here are some easy reminders of what to keep and what to get rid of & when:

• Pay stubs: Keep for entire year until you receive your W2–check W2 against last pay stub for the year to ensure accuracy, then toss pay stubs.
• Utility bills: Hold for one year to assist with any potential billing issues, then toss. Keep for 3 years if you count any of these as business write-offs.
• Bank/Credit card statements: Keep for one year unless you’re planning to submit a large loan request (home, HELOC, car). In that case, keep digital files for the past 2 years to avoid bank fees for pulling old records. In this tough lending environment, you’d be surprised how much banks now require just to be able to submit an application. Scrap those ATM receipts once you’ve verified the transaction has hit your account.
• Tax returns/Supporting documents: The IRS can challenge anything for up to three years after filing, so you must always keep all returns/supporting documents for the previous three years. If you’re self-employed, you should keep these items for 6 years because that’s how far back they’ll go if they suspect you’ve not reported income (typically they reserve this for those who’ve failed to report income by more than 25%, but better to be safe than sorry). Furthermore, if you don’t file at all or file a fraudulent return, there’s no limit to how far back they’ll go so please always take care of your obligations honestly when they’re due!!!
• Investment statements: Toss monthly/quaterly statements once you’ve checked against the annual report. Keep records of trades for at least 3 years. Have you made any Roth IRA conversions? Save that 8606 form until retirement to prove you’ve already paid the taxes!
• Policy documents/Deeds/Warranties/User manuals: Expired policies or warranties? Trash them. Those user manuals you’re sure you’ll need someday? Most are online now, so trash those, too. Just make sure to keep those deeds and titles, OK?
• Forever documents: It’s common sense, but never, ever throw these away. Also, make sure your spouse/next of kin know how to access them. Additionally, it’s a great idea to keep a permanent file of all loans you’d paid off (mortgages, cars, old credit cards, student loans, etc.).

 

Shred, baby, shred!

Do not, and I repeat, do not throw anything into that recycling bin without shredding it first. Put down the papers, drive to Target, buy a cross-cutting shredder, plug it in at home, and shred your heart out. It doesn’t need to be an industrial-strength shredder, either–anything that cross-cuts will be fine but be prepared to give some of the smaller models a breather so they don’t overheat!

Review, renew, evaluate

You should be taking a look at all of the following:

• Financial goals. Are your goals still valid? Do they still work with your current life/work/health situation? Update your progress, make any necessary changes, and chart your course for the remainder of the year. Even better, make a timeline and post it somewhere you’ll see it daily. Visual reminders work wonders on motivation levels!
• Will.  Do you still have the correct executor and trustees designated? Do you have an emergency plan in the event of a serious accident, illness, etc?
• Insurance. Is your designated coverage  for life, home, auto, and disability adequate? Are your beneficiaries correct? In terms of homeowner’s/renter’s insurance, now’s a good time to update your photo records of your belongings. You don’t have photo records of your belongs?! Load up that memory card. right. now. so you have proof for any potential insurance claims.
• Benefits. Do you have adequate health insurance coverage? Are you planning to make changes during an upcoming open enrollment period? Make those plans now to a costly avoid last-minute rush. Do you have FSA expenses to file? Don’t miss those deadlines…
• Charitable Giving. Are you still planning to donate to the same causes? Do you have a plan to do so? Write it down and review it!
• Investments. A personal audit of 401K performance, investment returns, and asset allocations affords you the opportunity to identify what to sell, transfer, or write off. If you’re completely lost, perhaps now is a good time to also consult a financial planner or enroll in some type of course to learn more.

 

Don’t fear the Reaper. …or in this case, the Tax Man

It’s never too early to estimate your tax obligations for the remainder of the year. You should also double-check your withholdings to make sure they work for your current financial situation (there’s a nifty calculator to do this on the IRS website–external link).

Pay yourself first

This should always be at the forefront of your financial choices and timelines, regardless of the time of year. You should always be paying yourself first–and as much as possible. Automate it and forget it when it comes to savings auto-deposits. Take advantage of the tax benefits of making 401k/403b contributions. And considering that spring cleaning typically happens right around the time that we’re filing our taxes, invest any return you receive immediately. Make your money work for you first before you let it work for others!

 

What do you do for spring cleaning? Is there anything you’d add to this list?