Decluttering is a big topic these days. There is even a new word for it – “Kondoing,” named after Marie Kondo, the current queen of decluttering, who suggests we assess every item in our house asking ourselves three questions about each item. Is it useful? Is it beautiful? Does it spark joy?
Decluttering your closets and attic will simplify your life and, hopefully, benefit others through your donation of no longer needed items to Goodwill or a similar organization. While you’re at it, why not take it a step further and declutter and organize your finances?
Over time, we tend to accumulate bank accounts, credit cards, frequent flyer programs and loyalty programs that are no longer wanted or needed. They may be unused or even forgotten.
Begin your financial decluttering by listing all your checking accounts, savings accounts and credit card accounts and the balances in each one.
Depository accounts. For most people, one checking account, one savings account and certificates of deposit for longer term savings are sufficient. If you have more accounts than this, consider consolidating them. The danger with multiple accounts is that you may lose track of some of them. After five years of inactivity, your financial institution is required to send the money to the state. You can check with the state of Louisiana at https://www.treasury.state.la.us/unclaimed-property-division to see if they are holding any of your money. If you have lived in other states, you can check at http://www.unclaimed.org and if by chance the state is holding some of your money, the online application for reclaiming it is self-explanatory. If you need help, your local bank will be happy to assist you in completing the reclamation forms.
Consolidating your accounts in one financial institution also makes you a more valued customer than one who scatters his money among many financial institutions.
Credit Cards. For most people, one primary credit card and one back-up card in case of a problem with the main card is optimal. Multiple credit cards are difficult to keep track of and can encourage unplanned spending. So, if you have many credit cards, consider closing all but two.
There are three main types of credit cards from which to choose – low interest, reward points and cash back. If you carry a balance and are paying interest, search for the lowest rate. Know that some national cards have rates as high as 79.9 percent. This is not a typo. As long as the rates are disclosed, these high rates are legal. Shop for a low rate card and then work to pay off your credit card debt. Rewards cards give either points or frequent flyer miles. If you travel a lot, consider frequent flyer miles on the airline you use the most. You may achieve status levels with benefits that are useful and enjoyable for you. Be aware those airline miles can expire and over time the airlines have tended to reduce the value of their frequent flyer miles. It is generally best to use frequent flyer miles quickly since their value tends to erode over time.
My recommendation is a cash back credit card. With the cash you can buy an airline ticket from any airline you wish or you can buy gift cards or other items from anyone with no restrictions. Cash does not expire.
Make cleaning out your closets and decluttering your finances a priority this summer.
If you have questions or need some help decluttering your finances, drop by your community bank branch. They would be glad to help.