It's not uncommon to accumulate things over
the years, without taking time to straighten them out periodically.
That applies to our finances as well as to our possessions. How
many credit cards do you carry? How many stocks and bonds, brokerage
accounts, and individual retirement accounts (IRAs) do you own?
It's not just a matter of finding time to keep track of all these
different financial assets. Often, these assets are acquired without
a clear-cut strategy, so you may own assets with similar investment
objectives or that are not compatible with your financial goals.
If you feel it's time to straighten out your finances, consider
these steps:
- Make a list of all your assets and debts.
List each one individually, so you have a sense of how many different
accounts you're dealing with.
- Go through each one of your investments.
Make sure you understand why you own each one. Are you really
adding diversification to your portfolio or do you have overlapping
investments? Assess the prospects of each investment and decide
whether you should continue to own it.
- Look for ways to consolidate accounts.
Try to get down to one bank account, one brokerage account, and
one IRA. This can significantly reduce the time needed to review
and reconcile accounts.
- Assess your outstanding debts. Do you
really need all those credit cards? Consider keeping only one
or two cards, so it'll be easier to monitor balances. Look for
ways to reduce the cost of your borrowing. Is it time to take
another look at refinancing your mortgage?
