Tax time may be over, but while you've still got your mind on your money let's do a little spring cleaning of your finances. In just a few steps you can sort out your paperwork, take advantage of opportunities, prevent disaster and clean up your personal balance sheet.
While you've still got a pile of tax paperwork stacked on the dining room table, let's start with ...
Taxes and paperwork
Now's the time to part with a bunch of paperwork you don't need to hang on to, before you stuff it all in a file cabinet to take up space for the next 20 years. When it comes to taxes, you only need to keep paperwork that supports your deductions, generally for three years. (However, the IRS can come after you for fraud with no statute of limitations, so if you got particularly creative this year keep any documents that might back up your phony-baloney "entertainment" expenses.)
You don't need to keep every monthly mortgage statement, for example, just a copy of your Form 1098 that states your total interest paid for the year. You should hang on to your escrow statement, too, not for taxes but just to have on hand until your insurance and taxes are paid. And you should keep paper and electronic copies (preferable in pdf format) of the returns you just filed.
Beyond taxes, hang on to paperwork that you'll need in future years, either to file taxes, get money, prove ownership, back up warranties or other specific future issues. That means things like end-of-year brokerage statements, annual Individual Retirement Account statements, receipts, deeds, insurance policies (unless expired) and so on. Separate your permanent records from the tax stuff you'll toss in three years (or seven years if you filed a claim for a loss from worthless securities or bad debt deduction.) You can scan it all and store it on your own disc or thumbdrive and/or in the cloud, make a nice file folder or set up a binder. Do whatever works for you, just make sure it's easy enough to access and maintain in the coming the years.
Shred anything you're chucking. You can invest in a good quality cross-cut shredder (I like the Staples Mailmate, now on sale in white for about $58) or hit Office Depot, which lets you bring in as much as two pounds of documents to shred for free. You need to print a coupon or download it to your smartphone, and the deal is good until Saturday. Staples has a deal for up to 5 pounds of free shredding that runs until May 2.
If you got a big tax refund, consider adjusting your withholding so that you get that money in each paycheck instead of a lump sump next April. Click over to IRS.gov and search for "withholding calculator." Use your last return and paycheck to calculate your liability and find out how to adjust your withholding forms.
You can set up an online savings account to actually get some interest by having the extra money from your paycheck regularly deposited at an outfit such as Capitol One 360, Sallie Mae Bank, Ally Bank or Bank of Internet. Link the online bank to your local checking account. Or, if things are tight, just use the extra cash to keep from putting other purchases on credit or overdrawing your checking account. But you're better off saving it, if you can, which you can since you haven't been getting it before now, so do that, OK?
If you're the kind of person who needs Uncle Sam to force you to save, then there's no shame in that. Some experts would scold that you're losing interest, but rates are so low that it's not any significant amount of money. It's better to avoid going into debt for your vacation or the kids' summer camp or whatever other use to which you put your refund. If that's the case for you, use the withholding calculator to make sure you'll hit your savings goal without having more than that withheld.
More cash flow
If you've got decent credit, chances are you've got a pile of junk mail with some very attractive credit card offers that will be disappearing very soon. Deals of 0 percent interest for up to 18 months on balance transfers are among the best offers, usually with a fee of 3 percent of the balance. If you've got any high-interest debt, this is a good way to pay it off cheap. Set up automatic payments so you don't lose your savings to late fees.
Anyone with a home equity loan or line of credit dating to the housing boom will find it's coming due soon, since most home equity deals run for 10-year terms. RealtyTrac estimates that $158 billion from 3.3 million lines opened between 2005 and 2008 will start coming due this year, with the average payment rising by $138 for loans that reset next year.
Your best bet is to see if your home value has bounced back enough that you can roll the equity line into a new low-rate mortgage, while rates are still well below 4 percent. Shop with a few established local mortgage brokers and, if you are unsure of your home's value, try to find one that will let you pay for a home appraisal (about $400) before you shell out any loan fees.
If your home still is underwater, see how much your loan will cost after the line expires, when it often converts to an installment loan. As an alternative, shop for a personal loan at your local credit union. For small amounts, try a balance transfer to the low-rate credit cards mentioned above.
If you haven't shopped around your insurance in the past two years, get three quotes for your home, auto and life policies, and ask for any combo-deal or discounts you can get. Same goes for cell phone service, home cable and Internet, too. When I chronicled my savings on cable, etc., in my award-winning book, I saved $139 a month on these items and received another $654 in temporary discounts and rebates.
While your knee-deep in paperwork, pull out each of last month's credit card and bank account statements, and scan them line-by-line to find unused or bogus charges, like a gym membership you haven't used in two years or a subscription to Cat Fancy even though Fluffy went to that big litter box in the sky in 2012. Also look for add-on costs, such as third-party phone answering services, ring-tone subscriptions and other junk charges that may have been crammed onto your bill.
Just go and automatically up your contributions to your retirement account by 2 percent — you won't miss it. If you have a 401(k) or similar account at work, contribute up to the level of your employer's matching amounts, but not beyond. If you're over the match limit or don't get a match, contribute to a Roth IRA. If you've maxed out your Roth contributions (good job!) add a regular IRA.
Most of all, if you have an abandoned 401(k) account left behind at a previous job, roll it over to your own regular IRA account now. If you left a small balance behind, your ex-employer may already have moved it to an IRA which is most likely gobbling up the balance with ridiculous fees.
The yucky stuff
Got life insurance? Got disability insurance? If not, check at work then make an appointment with a Certified Life Underwrite (CLU). Also put together a "death dossier" of your accounts, policies, contact information and passwords and file that with someone or at least where your heirs can find it, such as next to the good silver.
Got a will? Got a durable power of attorney? Got a healthcare power of attorney? Go get those, too. If you have old ones, update them. I once met a couple that did have a will and it even included their two dogs. It did not, however, include their two kids. Plus, the dogs had died, meaning the will could have ended up in probate hell just to cut out Boots and Rover.
And something for yourself
Next, scrounge up all the unused gift cards around the house. Most store-brand cards won't charge maintenance fees, but bank-issued cards from MasterCard and Visa can, and, if they do, eventually will run down your balance to zero. You can cash cards out using Square or Google Wallet for a small fee, or just use them to pay your grocery bill and refund the cash to yourself. Store-brand cards can be sold online.
Finally, give yourself a gift by shopping around your credit cards to find the best cash-back or rewards deals. You can compare rewards deals at CreditCards.com.