5 Steps To Peace Of Mind

Here are five steps to get you started on simplifying your financial life:

1. Limit the number of credit cards you have.
   According to the Federal Reserve survey of consumer finances, the average American carries 4.9 credit cards. American Consumer Credit Counseling says its clients tend to have 10 or more. That is a lot of due dates, payments, interest rates and annual fees (if there are any) to keep track of. Try to trim your credit card count to two cards. One with no annual fee that is used for only new purchases and paid in full each month. The other with a low interest rate that carries only unpaid balances and is not used for new purchases.
2. Plan for the big non-monthly bills.
   Do you have to scramble to pay for big non-monthly bills, such as car registration, homeowners insurance and property taxes? If so, try to put aside money for these expenses. You can look at last year's bills for a guideline or just add up the expenses and divide them by the number of paychecks you receive. Be sure to set up an automatic transfer of that amount to a savings or money market account.
3. Direct deposit your paycheck.
   According to the Direct Deposit and Direct Payment Coalition, 30% of workers who could take advantage of direct deposit are still missing out on the ease and convenience. It is a timesaver and saves you from standing in line at the credit union to deposit your paycheck. It's also safer, faster and more convenient to have your employer send it electronically to your account.
4. Pay your bills electronically.
   Just like direct deposit, many people also resist this powerful simplifier offered by their credit union. Paying monthly bills through your credit union's bill payment service is really easy and it saves you time and money.
5. Consolidate your financial accounts.
   Consolidating accounts will save you money and simplify your life. There is no reason to have 10 different IRAs, 40 mutual fund accounts, 5 checkbooks and a dozen life insurance policies. If you have too much information to process, you'll face problems. Let's say you have four separate IRA accounts: a traditional IRA for contributions, another one for a rollover from a 401(k), a Roth IRA for contributions and a Roth IRA from a traditional IRA conversion. To reduce the custodial fees, merge the two traditional IRAs with each other and the two Roth IRAs with each other.