Inside Money: Spring clean your finances


It’s spring cleaning time. This year, after you trash all the junk in your garage and unclutter the closets, take a crack at getting your financial house in order. With tax season upon us, it’s the best time to get started. Here are 4 steps for spring cleaning your personal finances.

When you started your 401(k) or other investment plan, you probably picked some solid mutual funds. If you’re like most people, you’ve watched your account balances rise and fall but you haven’t reconsidered your investment choices. The best way to review a mutual fund is to look it up on Compare the performance and expenses of your funds with those in the same investment category. If a fund is underperforming or its fees are higher than average, consider switching. You also can use Morningstar’s Portfolio X-Ray tool to compare investments within a portfolio of mutual funds to see if there’s overlap — too many funds owning too many of the same investments. If it’s time to sell, then sell. It’s too late for your 2010 return, but you can offset capital gains with sales of losing investments in 2011, and the tax rate for most investors stands at 15 percent.

You can get rid of paperwork by banking and paying bills online. 80 percent of households with internet access use online banking, and 40 percent use online bill pay services, according to a survey by Fiserv, a financial technology firm. The use of paper checks has declined to just 26 percent of all payments. Most billers offer so-called paperless bills. The company will send you an e-mail notification about a bill, and from there you can visit the company’s site to make payments directly from your checking account. Better yet, let your bank do the work. Most offer online services in which the bank will electronically receive your bills, notify you when payments are due and you can initiate payments. Same goes for your investments. Most financial service companies offer online account access and e-statements. Some companies also offer portfolio aggregate services, through which you can access all of your online accounts with different companies in one place.


If you’re not comfortable paying bills online, you’re probably bogged down in a lot of paperwork that you don’t really need. Buy an expandable file folder with pockets for impor-tant current documents, such as investment and bank statements and receipts for deductible purchases that you’ll need at tax time. Have a separate system for current bills. Once you make a payment, you can dump most of the paper that came with the bill, as long as you’re sure the charges were correct and you won’t need it for a tax deduction. Make sure to keep important documents, such as insurance policies and a list of your investment accounts, in a safe, firebox or safety deposit box.

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