Financial Endurance
“May your spring cleaning help you realize you are a rest-of-the-year hoarder!”
-Unknown, (Quoted by smart aleck not responsible for the cleanup)
Every year I resolve to declutter, organize and simplify my life and financial affairs. An ideal time might be shortly after income tax season when my desk and dining room table are covered in paid bills, a shoebox full of receipts, statements, and tax forms, in addition to all the other stuff (a technical term) that has accumulated in my office and around the house. The challenge is that these days tax season never seems to end. Every month on the calendar with a 15th day appears to have some important deadline. There are filing deadlines, filing extensions, and even deadlines to file for filing deadline extension! And we are already halfway into the ‘new’ year. Stop the madness!!
So this year, I drew a line in the sand. I decided to dig in shortly after Tax Day which was conveniently pushed closer to summer this year due to the infamous COVID-19 Pandemic.
Each year the “Big Cleanse” brings its own unique challenges and rewards, and 2020 and 2021 take uniqueness to a whole other level. So here are some of the reminders and tips I’d like to share which I hope will help rid you of last year’s clutter and help you finish 2021 strong.
So, get pumped! Grab an energy drink or caffeinated beverage of choice and crank up your favorite iTunes playlist or Pandora channel for some inspiration.
If you have a too much paper then use this as a time to select “Paperless” options for your bank and investment accounts, as well as utility and other bills. Your significant other and the environment will both thank you.
Go through your old paper files and shred everything you no longer need or you have already saved electronically and backed up to the cloud. However, it is advisable to keep your tax files for at least 7 years from the time those tax returns were filed, as the IRS generally has 6 years to collect unpaid tax or start legal proceedings in cases where you may have underpaid.
Review your credit card statements and automatic payments to identify periodic payments for subscriptions and memberships that you may not even remember signing up for. Perhaps you are paying for that long forgotten “risk-free trial” which conveniently auto-renews at full price after the first year, or you simply don’t need that easily-overlooked $19.99 monthly subscription you haven’t looked at since the they year the Miami Dolphins won a Super Bowl (yeah, I am that old!).
Look at the apps on your electronic devices and delete those you don’t use. They will only distract you from apps you need or enjoy while using memory and running down your battery.
Update your social media profile photos and information. You certainly wouldn’t want to give the impression you are still the keg master at your college fraternity or sorority house and wear bell bottom jeans and a mullet in 2021… unless of course that is a fitting profile… not judgements here!
Check expiration dates on passports, driver licenses, (dare I say) voter ID cards, professional licenses and certifications, association memberships, loans, leases, insurance policies, etc. Renew as needed or create a calendar reminder shortly before each expiration date. And on the subject of calendar reminders, add birthdays, anniversaries and meaningful dates. Forgetting these can be costly if you know what I mean.
Revisit your financial plans, investment portfolios, budgets, contracts and insurance coverages to ensure these are still valid and work with your advisors, as needed. (my shameless plug indeed!).
This is also a great time to review and update the beneficiaries you listed on your retirement, savings and investment accounts, and insurance policies to ensure that those assets or proceeds will be distributed appropriately upon death. We have all heard stories of the person who forgot to replace their estranged ex-spouse as the beneficiary of their 401K and their current spouse and children inadvertently got nothing. Things change and life happens so it’s advisable to double check for peace of mind.
Similarly, why not review your estate planning documents to ensure that your assets will be distributed precisely as you wish, taking into account special needs, your desired legacy, and tax and/or probate implications. Again, things change and life happens so it’s very important to keep on top of this.
If you don’t already have estate planning documents, the following are highly advisable for most people to consider even if you do not consider yourself wealthy…
While this is certainly not a complete list, and not everything I mentioned here will be relevant for everyone, I hope this provides some food for thought, albeit wrapped up in a pretty corny attempt at ‘humor’.
Please drop me a line and let me know what you think or if you have questions. I am also happy to introduce other specialized advisors from my professional network if that might be helpful.
Stay safe and happy cleansing!
In the coming weeks, in this column, I will share information and knowledge on many more “Financial Endurance” topics. Among those include: