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How To De-Clutter Your Financial House

By David Bakke

simplify your financesThe word “de-clutter” is all over the place. I’m not even sure it was a word until recently. “De-clutter” your house. Get rid of all your junk. “De-clutter” your life. Live more simply. And the beat goes on. Then I began to think. What if that concept were applied to our “financial house”? Isn’t it just as important to get rid of all your financial “crap” as well? The more bank accounts, credit cards, and bills you have, the more complicated your finances get, and you begin to lose track of it all. Once you do this, you’ll start finding yourself missing payments, paying late charges, paying for interest on credit cards, and getting frustrated VERY quickly.

Is It Important To Simplify?

You bet it is. For me, a major step in the right direction in solving my financial woes was to “de-clutter” my financial life. I actually think it’s a core issue of being in debt, and a reason that a lot of people use as an excuse to put off doing something about it.

When I was at my worst, I couldn’t even tell you how far in debt I was. Not because I didn’t want to, but because I didn’t know. I had so many credit cards that I couldn’t keep them straight, and I was so far behind on my bills that I didn’t even know how much I owed and to who. Every time I began to get serious about getting out of debt, the thought of trying to figure out that whole mess was enough to make me put it off again and continue living the same, debt-ridden life.

Just Do It

But regardless of your financial situation, “de-cluttering” your financial house is imperative. Slimming down, getting organized and staying there is a key to any financially happy home.

So Where Do You Start?

IF your life is in serious need of financial de-cluttering, the following list is a great place to start:

Physically organize your bills. This means buying some sort of organizational system, even if it is nothing more than a labeled accordion file. Here I would keep ALL my monthly bills, including utilities. Two reasons. One, for easy reference. And two, there very well may come a day when you’ll need a copy of one of those bills, and when you do, it will be right there. Save your credit card bills for the entire year for tax preparation time and empty out your utility statements every six months. That way, your filing system doesn’t overflow. If you get a lot of electronic bills in your email, then create a separate folder in your email client called “Bills.”

Slim Down Your Financial House. Now that you’re organized, it’s time to slice and dice. First, you need to look at consolidating your credit card debt. If your balances are too large to consolidate, then just stop using so many credit cards. If you can qualify for a 0% balance transfer credit card offer, consider balance transferring all of your cards to one card with 0% interest, but try avoiding the 3% balance transfer fee that many cards try to charge you for. If you ask that it be waived, many of them will do it if you get the right person on the phone. Personally, I have two cards. One for 90% of my purchases, and another that I use as a backup. That’s it. I keep a debit card for emergencies when I need cash, and I pay off the one credit card at the end of the month with the cash in my checking account.

Consider Bundling. Note, I said “consider” it. Bundling is another term you hear about like it’s the next latest and greatest savings vehicle. Don’t get me wrong, some bundles are great, however, some are just neatly packaged ways of getting you to spend more money. Don’t just dive in willy-nilly to some bundled package of phone, internet, and cable just because it looks good. Make sure you are actually saving. If you do decide to bundle, be sure to monitor it. These companies have a funny way of inching up your monthly bill, and before you know it, you’re spending more than before you bundled. Some of them only have an introductory price, then after a year, they bump the price up to the original bundle price without notifying you. Comcast is notorious for doing this. They’ll give you all three services for $99, but then bump it up to $140 to $150 after 6 months to a year of service. Make sure to keep track of your bill to spot these sneaky moves.

Payment Calendar. If you are not computer savvy and can’t set up something online, then at least get yourself a separate payments calendar. Write down all due dates five days before they’re due (a built-in guard against forgetfulness) and post it next to your regular calendar. If you are computer savvy, there are lots of ways to organize yourself so you never miss a payment again. Automatic drafts are an option (but need to be monitored also), email alerts are great, and there’s even a variety of websites and software dedicated to organizing your finances for you. If I had to recommend a website it would be Mint, and if I had to recommend free software it would be some form of Quicken.

De-cluttering can put you on the path to a less stressful financial life. Do not use your finances being “a mess” as an excuse not to do anything about them. Slim down, organize, and figure out where you are, so you can then get to where you want to go.

(photo credit: conchur)

David Bakke
David started his own personal finance blog, YourFinances101, in June of 2009 and published his first book on ways to save more and spend less called "Don't Be A Mule..." Since then he has been a regular contributor for Money Crashers. He lives just outside Atlanta, GA and most all of his free time is taken up by his amazing three year old son, Nicholas.

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  • http://www.dougmcclure.kyfb.com Denise

    Thank you for the article! Very interesting read!

  • david

    Denise

    Thanks for reading and thanks for your kind words. Look forward to hearing more from you in the future.

  • Froogle Noodle

    There is a down side to getting rid of credit cards. You lose your credit history associated with any account that you close out. You want to keep at least one “old” account. Your credit history is only as old as the age of your oldest open account.

    • David/moneycrashers

      Hey Froogle Noodle:

      Thanks for commenting. Keep in mind that I don’t advocate “closing out” the account, as not only do you lose this “history” but it can also lower your credit score.

      But you do bring up a good point as well–that you want your credt file to be as “old” as possible.

      Thanks for weighing in!

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