Have you ever sat through a Saturday morning marathon of the TV show “Clean House,” which makes over people's cluttered homes, and smugly said to yourself, “That is not me”? I have. Lying in my comfy bed, drinking yet another cup of coffee, I looked over at the jumbled mess of sweaters, jeans, ball caps, and t-shirts in my closet and thought, “That is so not...”
Hm. So maybe it was me, just a little bit, I decided.
I got off the bed, pulled everything down from that closet, and started to sort. It took about 30 minutes to separate it all into what I loved, what I hadn't worn in more than six months, and what I can only call forgettable items from the '00s. (Did I really need that t-shirt in every color?)
Remember the shampoo commercial instructing you to “lather, rinse, repeat”? The irony was that if you followed those directions, you would never actually leave the shower until the bottle was empty. (Although, thinking about it now, that was a fantastic way to generate repeat sales.)
Well, I want you to apply the same sort of process for each closet in your house—the difference being that my suggestion won't cost you anything, or completely dry out your scalp. In fact, following this protocol will provide you great benefits, just as it has for me.
Indeed, once I organized my closets, the benefits were multifold. (Get it?) It was a win-win-win-win: more room in my closets, a sense of personal accomplishment, gently worn clothes to be donated and resold for a good cause, and a tax deduction receipt for 2012. If only all household chores generated such great returns.
In that same spirit, in honor of tax season (hopefully you have already submitted your return or soon will be), I want to share a strategy I have followed ever since I started working and became a taxpayer. Each January, I create a folder for the year called “Tax Prep.” When I donated those bags of clothes, I added the receipt I received to that folder.
If you start your own folder, every time you make a donation, add the receipt you receive to it, providing it a home until the following January when tax preparation starts all over again. Even though it’s already April, it's not too late to create a Tax Prep 2012 folder.
Spring is also a good time to revisit your budget. Whether you actually recognize it, everyone has a budget. Sometimes a person's budget is as simple as, “I spend what I get paid.”
Open a savings account at the financial institution where you presently have your checking account and auto-transfer some money each pay period to it. It may be $20 per pay period or $200—it doesn't matter. Starting the process is what matters.
The interest rate on that may not pay much right now, but that's okay. That rate probably will go up again (it has to some day, right?), and you’ll still enjoy seeing your balance grow each month. Now you'll have cash for emergencies or, better yet, maybe even date night.
I used those emergency funds recently to buy yet another tire to replace one that hit a nail on the beltway and clothes for my 8-year-old daughter who was going through ANOTHER growth spurt—much better than using credit cards, especially as those rates are currently not low.
So there's your kick-start for spring: create a folder to organize your finances for the remainder of this year through next tax season, make sure to put your charitable and donation receipts in that folder, and put yourself on an auto-transfer payroll. And clean out your closets.
Don't forget, and don't skip any of it. I'm being hard on you because I am the likeliest person to read something like this and say to myself, “That sounds good—maybe next month.” Next month is now. As far as that auto-transfer is concerned, try starting at 5 percent of your net pay, so if you net $500 per pay period, then that’s $25 you'll be putting away each time. If you net $1,000, it’ll be $50. Here’s your mantra: “I am so worth that 5 percent. All for me!”
You may have to skip a mani-pedi once a month, but your savings account statement will reward you. And just think about all the shampoo you'll be able to buy. BC
Annie Morrison is an independent advisor representative with and securities and advisory services offered through Commonwealth Financial Network, a Registered Investment Advisor, Member FINRA/SIPC. Zuma Financial Advisors in located in Reisterstown, MD. Email her, at [email protected], or call (443) 468-3280.