Straightening Out Your Personal Finances
Many of us purchase and accumulate things over the years, without taking time to clean them out periodically. That applies to our finances as well as to our possessions. How many credit cards do you carry? How many stocks and bonds, brokerage accounts, and Individual Retirement Accounts (IRAs) do you own? It's not just a matter of finding time to keep track of all these different financial assets. Often, these assets are acquired without a clear-cut strategy, so you may own assets with similar investment objectives or that are not compatible with your financial goals. If you sense it's time to straighten out your finances, follow these steps:
- Make a list of all your assets and debts. List each one individually, so you have a sense of how many different accounts you're dealing with.
- Go through each one of your investments. Make sure you understand why you own each one. Are you really adding diversification to your portfolio or do you have overlapping investments? Assess the prospects of each investment and decide whether you should continue to own it. Don't avoid selling just because of a loss. You may be better off selling that investment at a loss and reinvesting in one with better prospects.
- Look for ways to consolidate accounts. Try to get down to one bank account, one brokerage account, and one IRA. This can significantly reduce the time needed to review and reconcile accounts.
- Assess your outstanding debts. Do you really need all those credit cards? Consider keeping only one or two cards, so it'll be easier to monitor balances. Look for ways to reduce the cost of your borrowing. Is it time to take another look at refinancing your mortgage?
Digg It!, 
Reddit or 
Bookmark it!
