[an error occurred while processing this directive] Spring Clean Your Finances - Steven and Chris

Spring Clean Your Finances


Financial expert Gail Vaz-Oxlade says we should make it a priority to "spring clean" our finances year round. Here's her checklist for doing just that.

Spring clean your finances

We feel so good when our homes are bright and shiny, so if you put a little elbow grease into your money, it'll glisten too. It's easy to accumulate a lot of junk in the junk drawer, and a lot of silly spending in a budget. Just as you'd dump the stuff out of the drawer and decide what should be there and shouldn't be, it's time to take a good look at your financials to see what needs cleaning up. What kinds of situations could benefit the most from this checklist? When you need to budget for a big purchase, for students planning to go back to university or after a divorce.

1. Review your regular expenses

Have your regular costs crept up? Think cable, cell phone, grocery bills. Trim back what you're spending and pour all that money on your most expensive debt or into your emergency fund. Or pile it up for that trip you've been longing to take. Throw out the garbage spending. You know that gym membership you never use? Get rid of it. And the magazines that pile up in the corner? Cancel the subscriptions.

2. Deal with debt

Debt is like a spider —  leave it to its own devices and you'll have webs all over the house. And if you ignore your debt, it'll just keep growing.  Hard to imagine being debt free? You can be. It may take another job to earn the extra money to get out of debt, but if that's what it takes, you can do it... if you're brave enough and determined enough.

3. Review your financial plan

Has anything changed in your life in the last year? Getting married is a big deal. So is having kids, changing jobs, becoming unemployed or getting sick. Retirement's a biggie too. If you haven't adjusted your financial plan to reflect the changes in your life, now's the time to do it. 

4. Take inventory

Take inventory of what you have. That means making or updating your net worth statement so you can see what direction you're moving in, and set some goals accordingly.

5. Take care of your will

You know that will you swore you'd put in place before the end of last year? Pretty lucky you didn't die, right? While you're at it, get the powers of attorney done too so that if you become a drooling fool someone can take care of you and your money properly.

6. Review your insurance

When was the last time you looked at your insurance coverage? Should you raise your deductibles to save some money? How about switching your home insurance for a better deal? What made sense a few years ago when you put those policies in place, may no longer be working for you today.

7. Organize your paperwork

Toss the excess paperwork.  Do you really need the phone bills for 2010? Deciding what to keep and what to toss boils down to a couple of things:. Am I likely to need this again as a reference? And am I obliged to hang onto this piece of paper just in case someone official starts asking questions? If the answer is yes to either one, the item gets filed. No, and it joins the ranks of the recycled.

8. Ask yourself: are you happy?

At its core, financial planning isn't just about the money. It's about what you're doing with the money. If you're not happy, you're doing something wrong. Whether you want to spend more time with your children or wish you could travel more, look at your goals and revamp your plan to meet them.

Gail answers some burning personal finance questions:

Q: How do you start to save money for an emergency fund? Is there a set percentage or amount to put away?

Answer: First, go over your budget and highlight the Must Haves. Add them up.  Essential expenses, I call them... things that you must pay to keep body and soul together... so food (not sushi), shelter, utilities but not cable or a fancy cell phone, minimum payments on debt so you don't ruin your credit, etc. You need six months' worth of those to cover your butt.  Yes, six months' worth. Next, work to set aside a specific amount every month to build your EF. There isn't a set per cent but you'll want to try and have your EF in place by a specific date.

Q: Should I pay off $25,000 in student loan debt, or use the money for down payment on townhouse?

Answer: Hey, if you want to buy a home, and that $25K will get you over the 20 per cent down payment mark, you can prioritize home ownership as long as you have an end date for those student loans and it isn't 10 years down the road.

Q: I'm recently out of university with student debt and am getting married soon. Housing prices are high--should we rent or buy?

Answer: If you can't afford to put 20 per cent down, and live on your post-home purchase disposable income you can't afford to buy. Rent until you've a) saved your down payment and closing costs and b) practiced living on what you'd have left if you were living in a home of your own. Add up the costs of the new home (mortgage, property taxes and insurance, utilities, maintenance), subtract your current rent and save the difference. If you can't do that, you can't afford the home.

Q: We have a summer home and wonder if that's a better place for our money or should we sell and put it into investments?

Answer: I can't answer this question since this is all about what you want: do you want to keep using your summer home? Are you knowledgable as an investor? If you don't know the rules of investing, moving from property ownership to investments in, say, the stock market are a bad idea. Investing takes work. So think about it carefully before you make the jump. Even with an advisor, you better know what the hell you're doing or you could see your money disappear through bad investments and market corrections.

Q: I came into some money. Should I be paying down my mortgage or put money in a retirement plan?

Answer: I have some good news, you don't have to choose. If you put the money away in a tax-deferred retirement savings plan, you can then use the tax savings to make a payment against your mortgage. Great right?

Q: I'm hearing a lot about buying gold. Will it really shelter me from the market fluctuations?

Answer: Gold is a commodity and is as susceptible to market fluctuations as any other commodity. It hit a high of about $1,800 an ounce in 2011 and has since fallen to a low of $1,300 in 2013. it's rebounding now, but where it goes next is anyone's guess.


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