Best Results Organizing

Two of the most popular and enduring New Year’s Resolutions are to get organized and to save more and spend less. In honor of 2016, over the next few posts, we’re going to look at 16 ways to organize your finances with small, easy steps you can take today.

1) Pull your credit history.

How? Pulling your credit reports is easy. Just go to AnnualCreditReport.com and click on “Request Yours Now.” You’ll be prompted to answer some questions about things like your prior addresses or current or previous loans. (They really want to make sure it’s you, so think before you click.)

Because you’ll be supplying personal financial information, you want to pull your reports from a secure computer, preferably one on your own network, rather than a public computer. If you’d prefer to avoid the web altogether, you can call toll-free at 1-877-322-8228 to request your report, or download, print, fill out, and mail a paper form.

Why? Your credit report includes information that is used to determine interest rates on loans and mortgages, rates you’re charged for insurance, and even whether or not you can rent an apartment or get hired for a job. The best way you can be certain that creditors have properly reported your financial activities, not misconstrued someone else‘s honest activities as yours, and haven’t let bad dudes secure credit in your name, is to check your credit history.

You are guaranteed one free credit report from each of the three credit reporting agencies (Equifax, Experian and Trans-Union). You could just contact them individually, but the Fair and Accurate Credit Transactions Act (FACTA) of 2003 made it federal law to guarantee your right to access your report, for free, once each year.

Once you’ve convincingly proven that you are who you say you are, go ahead and print (or better yet, save a PDF of) your credit reports. And make a note on your calendar to check again next year.

When? You can choose to pull all three reports simultaneously once per year, or stagger them and pull one report from each agency whenever you like, perhaps every four months. While experts sayl that the staggered approach is more likely to catch an error quickly, most people are not diligent about remembering to pull their reports on a regular basis. If you’ve never pulled your credit history before, I suggest pulling all three reports simultaneously, familiarizing yourself with the formats, and then you can decide what you want to do going forward.

2) Check — and, if necessary, dispute — your credit history.

According to a Federal Trade Commission study, 20% of consumers have errors on at least one of their credit reports, and 5% have errors which could adversely impact them during the lending process.

Just as buying (and even watching) exercise DVD won’t help you achieve your resolutions to lose fat and gain muscle if you don’t actually do the workout, downloading your credit report is an exercise in futility of you don’t actually review it. Go through it page by page, line by line:

• Are there credit cards or financial accounts you never opened? (Note, credit card lenders often buy one another out, especially with store-specific credit lines, so be sure to cross-check account numbers to make sure something unfamiliar isn’t just the product of a buyout.)
• Are there addresses or places of employment that don’t pertain to you? (Minor errors, like misspellings, are worth fixing, but don’t necessarily require disputation. Correct them to prevent confusion in the future, especially when filling out forms where you have to jump through hoops to verify your identity.)
• Does it list liens or judgments against you that have no relation to your actual financial history?
• Is there information that should no longer appear on your history, such as a bankruptcy that is more than 10 years old?

If there are mistakes on your credit report, contact the appropriate credit reporting agency and the lenders in question to dispute the errors.

3) Check your credit score.

Although you’re guaranteed access to your credit reports for free, there’s no such promise for your credit score. You hear a lot about your FICO score, but different lenders access multiple scores to assess the interest rates they will offer you for credit cards, auto loans, and mortgages. You can purchase your individual credit scores from each of the credit reporting agencies, or buy bundled scoring from MyFICO.com.

LendingMemo.com

However, unless you’re getting ready to make a major purchase, you have a variety of free options to gain access to least one of your credit scores, which should give you a ballpark sense of your official creditworthiness. Barclaycard, Citi, Discover, First Bankcard, US Bank and others offer credit scores to customers on their web sites; Discover also provides credit scores on monthly bills. In addition, some banks and credit unions are offering free scores to customers as inducements for their loyalty, and CreditKarma, is a surprisingly non-spammy option for accessing your score.

In Paper For Your Plastic: Organizing a Better FICO Score, I’ve written about how understanding the makeup of the FICO score can help you improve your creditworthiness in the eyes of lenders. Since that post was written, new rules about medical indebtedness guarantee that unpaid medical debt will carry less weight than other types of consumer debt, and any medical debt eventually paid off will be removed from your credit history immediately, even if it had been in arrears.

4) Track your expenses.

With the advent of online banking, automatic transfers, and even mobile payment (like Apple Pay), it seems like nobody writes checks anymore. But that means people have gotten out of the habit of reconciling or balancing their checkbooks. It may seem to make sense — no checks, no checkbooks, but we still have checking accounts, and so whether they are paper or digital, I think we need check registers.

When we all wrote checks, we were forced to pay attention to where our money was going, but with all of those swipe-and-done transactions, we’re far less likely to notice how much money is draining out of our accounts until the money is gone. And with automatic transfers, we tend not to look too closely at the bills that come on a monthly basis, so we may not notice errors (fraudulent or otherwise) until it’s well past the date they might be reversed.

At the very least, set an alarm or alert on your computer, phone or tablet to remind you to check your bank account and credit card statements monthly, before manually paying or allowing automatic payments to go through. (Weekly would be better, if you hope to catch fraud.)

Write down or track everything you spend during this first month of getting your finances organized. If you’re just getting started with tracking expenses, it will help to do a little bit every day. When you’re sitting in front of your computer to authorize a payment, mark it in your paper checkbook register. (Your bank will give them to you for free.) Yes, it may seem old-fashioned, but the observer effect notes that the act of observation changes the phenomenon being observed. So, just as Weight Watchers has proven that journaling calories and activity has a positive impact on weight loss, you’ll likely see that the mere act of tracking your expenses to organize them will improve your finances.

When you come from a day of shopping, pull the receipts out of your wallet, and mark anything that drafted from your checking account in your register, and put your credit card receipts in an envelope for easy access. If you follow along daily, it shouldn’t take more than five minutes (unless, of course, you’re a BIG spender), but the value will be returned to you.

Periodically, by checking your online accounts, and certainly once your monthly statement is generated (whether on paper or digitally), check in with your finances:

• Balance your checkbook register, even if you haven’t written actual checks in eons.
• Check receipts against your online bank and credit card statements.
• Visually scan your credit card statements as soon as they arrive, and call to verify anything that looks hinky.

Once you’re familiar with your spending patterns, especially if you rarely use cash, it’s also a great idea to set up an online financial dashboard service with web- and app-based trackers like Mint. But to start this process, you’ll pay more attention to those little drips and drops of funds if you put pen to paper. (We’ll talk more about financial dashboards in the upcoming posts of this blog series.)

Being organized doesn’t just mean sorting the paperwork and digital receipts. It means knowing what you have and where you have it, keeping what works and getting rid of what doesn’t suit your goals.

5) Audit your ongoing expenses.

Clutter piles up when we don’t think about whether we even want or need something. Financial clutter piles up the same way. No matter what you pay monthly, quarterly or annually for a service, if you don’t think about whether you still want it (or want it at that price), your expenses are likely to get out of control.

Comb through your digital and paper records, and consider your subscriptions and ongoing purchases. What purchases duplicate what your household already buys? What could you replace with a better deal? What could you eliminate altogether? Consider the following categories:

Video: Do you have Amazon Prime, Netflix, Hulu, and cable/satellite? Are you watching enough of each to justify keeping them all? (Paper Doll is a huge TV fan, but even I find it’s sometimes worth my while to pause a subscription for a few months when life is too busy to catch up with all my stories.)

Audio: Do you have satellite radio in your car, like Sirius XM? What about subscriptions to Apple Music and premium streaming music via Spotify or Beats? If you already have Amazon Prime, could you scale back on paid streaming? Could you bear to listen to commercials and drop from paid streaming to free versions?

Reading: Do you have ongoing (digital or paper) magazine and newspaper subscriptions that you never get around to reading? Do the magazines pile up until you guiltily toss them in the recycling bin?

Communication: They’ll have to pry my landline from my cold, dead hands, but for some people, the switch to mobile-only makes good financial sense. Also, have you checked to make sure your cell phone plans line up with the number of minutes, texts, and data you use?

Computers: From Evernote to Dropbox for storage and collaboration to the various plugins that keep a blog running to software and app subscriptions and upgrades, there’s a truth to be told. Just like with some relationships, when it comes to some digital loves, the bloom is off the rose.

Gaming: Paper Doll doesn’t judge. (OK, she does, but…) If you’re actually playing and enjoying the various MMORPG or online or interactive games for which you pay, more power to you. But if your digital ranch has long gone untended and you haven’t logged in for a long while, it might be time to cull the herd.

IRL, or In Real Life: Do you belong to a gym, associations or clubs? Do you go often enough to make the fees expenses worth what you’re paying? If you haven’t been active in a while, cancel, or see if your membership can be suspended for a few months, until you can gauge your interest.

Gifts: Do you automatically renew your grandpa’s golf magazine or your BFF’s CatFancy? Make sure they still want these particular benefits of your largesse. (And, in general, think about giving gifts of experiences rather than tangible objects.)

Professional expenses: Do you need to renew dues or pay for certifications or licenses? Just make sure you still participate in all of those activities before continuing to rack up expenses.

Just as with our new year, this is only the beginning. The rest of this series of 16 financial organizing strategies will share more tips about organizing your financial paperwork, budgeting with the help of technology, lowering your expenses, streamlining how you get paid, and more.