Extension Agent: Messy closets not only target for decluttering; look at finances, too
If the mood strikes to clear out the clutter as the new year rolls around, one often overlooked area may need the most attention: personal finances.
"As the calendar turns to a new year, one of the things we think about is getting organized at home among the things we own and cleaning out. But there is another important element, and that is trying to gear up to deal with our financial papers to become a little better financially organized," says Nancy Granovsky, Texas A&M AgriLife Extension Service family economics specialist.
Some people may be reluctant even to open their end-of-year investment statements because they know that the numbers will be very much lower than they were 12 months earlier.
Getting financially organized might initially make you feel depressed. But getting a handle on it overall and developing some action steps to make changes may make you feel better. A simple decision on where to put financial papers may be the first step. At a minimum, categorize your incoming mail because January is the month when you will be receiving financial statements, many of which do have tax implications.
So develop a system for monitoring your incoming mail right after the first of the year. A basket or a file folder can be used to hold relevant tax return material as it arrives whether it is opened immediately or not. The beginning of the year is a good time to take a look at how the household income is being spent.
"Times have been difficult for many people, and they feel that there rarely is enough money to make it to the end of the month. That makes it prime time to try to take a look at how we are spending money," Granovsky says.
Financial experts note that two of the most important areas for consumers to focus on are ways to reduce debt and ways to save.
"So getting a handle on finances - where the money is coming from and where it is going - and how can we cut some corners is a good 'getting organized' kind of financial task for January," she said.
Financial organization is often easier to approach in January, she said, because people have their minds set on personal improvement such as losing weight, eating right and getting more exercise.
"We make all kinds of resolutions," she says. "But for 2014, we should be looking for ways to develop dual strategies to improve our physical health and our financial health."
If you are carrying a lot of debt, Granovsky said, make yourself a little worksheet that lists who you owe, how much you owe, how much are you paying right now on a monthly basis and what is the annual percentage rate that is being charged by the lender or credit card issuer.
This will help you know where to start reducing debt, she said. Also, this is the time for looking closely at the fine print because maybe the terms and conditions on your credit card have changed, and maybe the charges are costing you more money than you realized.
She said people are beginning to think about how their money is being spent and are figuring out ways to economize - to purchase the same item or service for less money. Saving money - no matter how small the amount - is as important as reducing debt.
"We can take small steps to begin to save," she said. "Household budgets are tight right now, so it really means taking a good look at how money is being spent and where can we squeeze out more savings."
Not eating lunch out as often and cooking more at home are two ways that people have changed spending habits. Even if only small amounts can be saved, something is better than nothing.
Resources: http://fcs.tamu.edu/money/ and the national Cooperative Extension System site http://www.extension.org/pages/Financial_Security:_Managing_Money_in_Tough_Times.
For more information about ways you can economize at home in order to declutter your personal finances, contact me at the Victoria County Extension office.
Erika Bochat is a Victoria County extension agent- Family and Consumer Sciences.