As I write this I am in the process of looking at apartments for my next move. Meanwhile, I’m also considering moving into a condominium or single family house. This is a tough decision as I have too many unanswered questions about my immediate future.
I can’t waste time; my lease is up at the end of June and I have to give my landlord sixty days’ notice to vacate today. Over the past few weeks, I’ve been investigating my mortgage options through LendingTree. In fact, immediately after I entered my information, the emails and calls began with offers. There is a lot of information that I haven’t had to deal with before, so I’m taking it slowly.
If I decide to buy I will likely need extra time, which would mean extending my lease on a month-to-month basis. My wonderful landlord charges an extra $300 per month for this flexibility. Obviously, I’m not excited about this option.
While going through all the mortgage options, which are complicated by design to ensure fees can be added to every visible and invisible corner of the process, I decided that I should simplify my finances. While I can’t control the complexity of mortgage applications, property taxes, and dealing with escrow, there are things within my control to simplify.
Here is how I plan to simplify my finances over the past few months.
Reduce the number of bank accounts.
I have a checking and savings account at Wachovia. It’s free, and they provide physical checks. They also have great customer service. I have a bunch of savings accounts and one account at ING Direct. The “Electric Orange” checking account is slowly becoming the one I use the most. I’ve switched my salary direct deposit to this account. I also have accounts at HSBC Direct and a number of other high-yield savings accounts.
I’m going to make a change along the same lines of Jonathan’s current set-up. Washington Mutual offers 5.0% APY on savings and free checking. Unfortunately, Washington Mutual does not have locations (ATMs or branches) near me. I wouldn’t be surprised if WaMu is prime for a takeover by or merger with a larger bank, which would likely mean the end of the perks I just mentioned.
My goal: One high-yield savings instead of the 15 or so accounts I now try to manage and one checking account.
Reduce the number of brokerages.
I recently mentioned that thanks to Vanguard‘s new easy-fee-avoidance policy, I plan on transferring my retirement accounts from TIAA-Cref. I also have non-retirement accounts at Scottrade and ShareBuilder, about $4,000 in one and about $200 in the other (mainly from free bonus money). There are no fees on these accounts, so I’ll only move them if there are no termination fees.
My company’s 401(k) is managed by the company I work for, so I cannot combine the account with any others.
My goal: One brokerage for my non-401(k) retirement plans, and possibly one brokerage for my non-retirement investments. Another option would be to liquidate my non-retirement accounts with the market high and put the money into savings. If not, change the investments to match what I feel would be good for me. Rather than the mutual fund I have invested at Scottrade, switch to an index mutual fund. Rather than the sector ETF and the two stocks I have at ShareBuilder, switch to a broader market ETF.
Reduce my open credit cards.
The last time I checked my credit report, I noticed I still had a number of open credit cards. It’s been a very long time since I’ve used anything other than my main card, which has been at times either a Citi Upromise Mastercard or Citi Platinum Dividend Select. I’ll keep my longest open card with a good history and I’ll close all the others.
My goal: Only two or three open credit cards.
Optimize my records retention.
When I get paper financial statements, they usually go in a file: the “to file” file. Eventually, I get around to filing the statements into the proper folder, but this takes a while. I need to get in the habit of digitizing everything. I have a scanner that is hardly used.
Rather than keeping so much paper I need to do three things. First, connect my scanner so I can digitize all my important documents. Second, buy a shredder so I can properly dispose of any sensitive papers. Third, dispose of old statements that I no longer need to keep. As a bonus, the fourth thing I need to do is regularly back up my computer files on an external hard drive or two.
Goal: Eliminate the paper clutter and messy files by organizing all documents electronically.
The above changes are all within my control. If I can simplify these aspects of my financial life, which have gone out of hand since starting this blog and opening new accounts whenever a new bonus or higher interest rate is offered, those aspects I can’t control, such as dealing with mortgages, won’t drive me insane.
Updated February 6, 2012 and originally published May 1, 2007. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.