Spring Clean Your Financial Life

“Financially Fit” is a column published by RCB Bank to help you gain knowledge on all things financial.

By: Kenneth Wohl | Category: Financial Services | Issue: April 2015

Kyla Wohl, RCB Bank Loan AA, spring cleaning her financial life.

Kyla Wohl, RCB Bank Loan AA, spring cleaning her financial life.

As temperatures rise and the flowers and trees begin to bud, we all get the itch to start spring cleaning. Spring cleaning typically involves deep cleaning your home, organizing your closets and drawers, and removing items you no longer need or use. Why not take this time to do the same thing in your financial life? I’ve listed a few items below for your financial spring cleaning to-do list, including places for potential savings.

Insurance: Look over home and auto policies. Not only do you want to make sure your current policy has you correctly covered since home values and personal needs change, but you should make sure your insurance company is charging you a fair premium based on other companies in the market. When shopping, make sure to mention any renovations, updates and claims that may affect your initial quote.

Life happens, so when it does, make sure to update your life insurance policy. Any major life changes such as divorce, marriage, birth of children or death of a family member cause a need for change of beneficiary. Also, lifestyle changes might affect your premiums. Have you lost weight or quit smoking? Certain life changes may allow your insurance agent to lower your premiums.

Time: 2-3 hours on the phone and a couple days to get quotes, new rate sheets. Savings: could be significant. Cost: zero out of pocket.

Retirement Accounts: Many people choose to invest in their company’s 401k. Not only does it allow you to invest money for retirement, it helps by being pulled out pre-tax, essentially lowering your taxable income. Sometimes we choose to move jobs and careers multiple times in our working lives, accumulating multiple 401k accounts, which can create numerous statements on a monthly basis. You can rollover your accounts into one account with your current employer (speak with HR about the logistics) or a self-directed IRA with a local investment company or bank. By simplifying your accounts into one, you can clean up your mail box and filing cabinet, as well as open up other investment choices.

Time: 2-3 hours. Savings: limitless. Cost: minimal out of pocket, if any.
Banking: Do you have multiple accounts at more than one bank? Are you set up with online banking, bill pay, mobile banking or other time-saving, money-tracking services? Having multiple bank accounts at various institutions can sometimes clutter our lives as well as take extra time to manage. Streamlining all your finances into one bank and setting up auto drafts for your monthly obligations, like car payments, mortgage payments and gym memberships will not only streamline your life, it may save money by avoiding late fees.
Time: 1 hour on the phone, 2-3 hours to close old accounts, open new ones, transfer automatic deposits and withdrawals and set up bill pay. Savings: varies. Cost: none.

Mortgage: If you choose to shop homeowner’s policies as suggested above, you will need to contact your mortgage servicer and request an escrow adjustment/analysis. Adjusting your escrow account doesn’t necessarily save you money, but it could reduce your monthly payment. After the servicer adjusts for your new policy and any current coverage/underage, you might end up with some extra cash flow every month. Also, mortgage rates are currently low and refinancing might be an option to save money. In the most simplistic view of a refinance, you need to know two things: How much will you save monthly? How much will it cost? Divide the cost by the savings and determine how long it will take you to re-coup the cost.
Time: 1 hour with lender, 30-45 days to close. Savings: unlimited. Cost: lender and title fees (+/- $3,000 locally)

Spending a little time to clean your financial life can potentially save you money and time, so get started with your spring cleaning!
*Opinions expressed above are the personal opinions of Kenneth Wohl and meant for generic illustration purposes only.

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