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With Independence Day behind us, the heart of summer has begun. For some, it is the time to disengage from real life issues, like personal financial. For me, it’s time for my annual “KISS” for your money! What is KISS? “Keep It Simple, Stupid” and it’s the perfect mantra for this time of year. Here are five tasks that are easy to complete before you shut down.
1. Manage due dates/Establish auto pay on available accounts. The National Foundation for Credit Counseling has found that about 1 in 5 adults does not pay all of their bills on time. While some are in fact struggling, for the vast majority the problem could be a case of bad timing. The good news is that most credit card issuers, cell phone companies and utilities allow you to change due dates to times of the month that synch up to when you receive your pay. You should also establish automatic payments, even if for a small amount, so your most important expenses get paid and you can avoid -- or at least minimize, penalties and fees. Remember, some bills are more important than others. While not paying a credit card or student loan on time could ding your credit score, failing to pay rent can get you evicted.
2. Consolidate accounts. Do you have a couple of bank accounts floating around? By combining them, the resulting higher balance may help avoid fees and even help you get better deals, not to mention, it will help streamline your financial life. The same rule applies to orphaned, old retirement or investment accounts that are looking for a home. Combining accounts also makes it easier to monitor your entire portfolio and ensure that your money is properly diversified. Once you create an asset allocation plan, set it and forget it! Choose auto-rebalancing so you don’t have to worry whether market gyrations are changing the allocation and subjecting you to more risk that you are comfortable assuming.
3. Boost retirement contributions. The first half of the year is over and if you are lucky, or perhaps frugal, you may find yourself with a little extra cash on hand. If so, let’s make a deal: go ahead and allow yourself to spend some of the surplus on a summer indulgence and the rest, use to increase your retirement contributions. This year, you can sock away 18,000 in most employer-sponsored plans ($24,000 if you over the age of 50) and $5,500 into a Traditional or Roth IRA ($6,500 if you are over 50).
4. Review auto and property insurance. If you have an old car worth under $5,000, eliminate collision and comprehensive coverage and increase deductibles. You may be able to earn discounts by purchasing car, homeowner’s and umbrella liability insurance coverage from one company. Next, with home prices rising, check to see if you have at least 20 percent equity in your home. Is so you may be able to drop your Private Mortgage Insurance (PMI).
5. Become familiar with the terms of your homeowner’s or rental insurance policies. I hear your groans, but the time to figure out what is in your policy is not in the aftermath of a severe event, but before it occurs. As a reminder, most standard homeowners’ policies cover structural and water damage only in limited circumstances, like when a falling tree knocks a hole in a roof or breaks a window, allowing rain to fall inside. Most policies do not cover damages that result from rising water, unless the homeowner lives in a designated flood zone and has purchased insurance through the federal government's National Flood Insurance Program.