Declutter Your Financial Life
Declutter Your Financial Life Provided By: University of Florida/IFAS Extension February 23, 2016
Extension Service
Declutter Your Financial Life
• Nationwide educational network • Each state and territory – Land‐grant university and a network of local and regional offices.
• Reaching out – Research – Education – Extension
2
University of Florida Extension • Partnership between University of Florida & County Governments – All 67 counties in Florida have an Extension presence – Most have a Family & Consumer Sciences Agent
4
Webinar Team
Dr. Michael Gutter, University of Florida, Associate Dean, State Program Leader for 4H Youth Development, Families and Communities
Julie England M.S.,CFCS Lake County Extension Agent [email protected]
Florida Master Money Mentors
Lisa Leslie, M.Ed., AFC® Hillsborough County Extension Agent [email protected]
• • • • •
Provide 1‐1 education Developing spending plans Organizing financial records Understanding credit & debt Planning for the future
5 6
1
Declutter Your Financial Life Provided By: University of Florida/IFAS Extension February 23, 2016
America Saves
15 Week America Saves Challenge • Pick a challenge plan
• Pledge to be a Saver and receive free personal finance updates and info about upcoming programs • Non‐commercial, no sales offers • In Hillsborough County www.TampaBay.Saves.org • Other parts of Florida www.FloridaSaves.org
– Basic Challenge – Hard Core Challenge – Financial goal of your choice – Track your progress – Submit your results and you could win a gift card prize – Feb 21 – June 4
• Register http://bit.ly/15WeekMoneyReg 7
Today’s Program
Declutter Your Financial Life
• Organizing your documents • Getting rid of what you don’t need • Organizing your financial accounts
10
9
Two Philosophies of Decluttering
Last Time
Organization
• Cost of Clutter
• Organize your space and possessions
– Financial – Time – Health • Physical • Mental Pixabay.com
Archived Declutter Your Life webinar: https://attendee.gototraining.com/878nx/recording/1453755954463534081
Simplicity • Minimalist viewpoint – Focus on needs, not wants – Spend less – Own less – Reduce carbon footprint – Focus on experiences, not things
Pixabay.com
11
12
2
Declutter Your Financial Life Provided By: University of Florida/IFAS Extension February 23, 2016
Potential Financial Consequences • Reduced ability to plan for the future • Tax consequences • Misplaced bills can result in late fees, lower credit scores and other problems • Crisis purchases increase spending • Cluttered homes sell slower and for less $$$ • Renting storage space can cost over $1000 year
Clutter is a delayed decision
13
Where is All This Paper Coming From? • Switch to e‐delivery of financial statements and bills • Open mail next to wastebasket or shredder • Reduce unsolicited credit, pre‐screened credit card and insurance offers
14
Step‐by‐Step Method
Analyze
Strategize
Take Action
– www.optoutprescreen.com – 1–888–567–8688
• Get name removed from junk mail lists – www.dmachoice.org 15
Step 1 – Find Your Documents
16
In Materials Section
• Where are they? – Filing cabinet? – Bill drawer? – Spread all over the house?
• What do you need? • What don’t you need to keep? • How long do you need to keep documents?
17
18
3
Declutter Your Financial Life Provided By: University of Florida/IFAS Extension February 23, 2016
Step 1: Analyze the Situation • • • • • •
Step‐by‐Step Method
What bothers you the most? What works? What’s not working? What’s essential? Why do you need to improve the storage? What’s causing the problem?
Analyze
Strategize
Take Action
19
20
Getting Started
Step 2 – Plan Your Strategy • Where will you store? • What if anything do you need to purchase • Is your plan sustainable (i.e. can you stick with it month‐to‐month) • Are your documents secure? • Do you need redundant copies?
• • • •
Most recent Easiest What bothers you the most Organize one category at a time, then move to the next on
21
22
Sort By Category
Organizing for the Long Haul
Monthly bills, pay stubs, bank statements Tax forms, documents, donations, etc. Investment documents Warranties and user manuals Policies, deeds and contracts Permanent records – birth certificate, passports, will, marriage license, etc. • Miscellaneous documents
• • • • • •
• • • • • •
Establish your work space Have storage for files Good lighting Comfortable chair Secure Involve Spouse/partner – adult children??
23
24
4
Declutter Your Financial Life Provided By: University of Florida/IFAS Extension February 23, 2016
Spouse/Partner
Keep or Toss?
• Need to know: – Location of important documents – Passwords – How to access accounts if primary bill payer is incapacitated or dies
• Communication is vital • Do you have needed estate planning documents? • If single, who has power of attorney etc. 25
26
Storage of Home Files
In Materials Section
• Current files: day‐to‐day records – bank account information, bills and receipts, loan agreements, some medical information
• Permanent files: on‐going records used infrequently – employment and education records, health benefit information
• Dead storage: anything uncomfortable discarding Store in less accessible drawers or boxes – old tax records, real estate you’ve sold
Legally Secure Your Financial Future was developed by a team from six land‐grant universities as part of the Cooperative Extension Financial Security in Later Life national initiative. For more information go to: http://articles.extension.org/pages/11477/legally‐secure‐your‐financial‐future
Source: Legally Secure Your Financial Future: Organize, Communicate, Prepare
28
27
Discard Monthly
Keep for 1 Year • Paycheck stubs
Unless needed for tax, business or proof of purchase: • Credit card receipts after they appear on statement • Grocery, ATM, debit card receipts after they appear on bank statement
– Save until you compare with W‐2 and Social Security earnings statement
• Canceled checks – Throw out unless needed for tax purposes or can be retrieved online
• Bank statements – Throw out/shred unless needed for tax purposes or can be retrieved online
• Quarterly investment statements – Double check with year‐end statement then discard/shred
29
30
5
Declutter Your Financial Life Provided By: University of Florida/IFAS Extension February 23, 2016
How Long to Keep Tax Records
IRS says‐‐‐‐
• Income tax records, worksheets, and documentation of deductions – IRS recommends 3‐6 years
• Keep records as long as needed for administration of the IRS code • Tax records often useful in situations where financial history is relevant
Source: Internal Revenue Service, Pub 552
31
Do Not Toss • Birth and death certificates • Marriage licenses and divorce decrees • Social Security cards • Military discharge papers, including spouse even if deceased • Immigration documents
32
How Will You Store? • Files • The “Cloud” • Computer
• Pension plan information from current and former employers • Estate planning documents • Life insurance policies • Titles for property still owned
– Make sure to transfer to new forms of storage – Always have backup copies in case of crash or degraded files
• Do You Know Your Digital Assets? Barbara O’Neill, Ph.D., CFP® – http://articles.extension.org/pages/72 624/do‐you‐know‐your‐digital‐assets 33
34
Digital Assets Inventory Worksheet
Grab and Go Box Emergency preparation Safe deposit keys Inventory list Emergency contact list (update mobile device) • Copies of insurance policies • Copies of identification records and health insurance
• • • •
35
Source : Keeping a Household Inventory & Protecting Valuable Records, http://edis.ifas.ufl.edu/dh138
36
6
Declutter Your Financial Life Provided By: University of Florida/IFAS Extension February 23, 2016
Declutter Your Financial Accounts
Financial Accounts
• Do you have multiple
• The more accounts you have, the more potential for fees • Investigate the cost of consolidating before making any changes • More potential for errors • Increased chance of identity theft
– Bank accounts – Credit cards – Investment accounts
37
Credit Cards • • • •
38
Investment Accounts
Do you need/use your cards? Consolidation may lower fees Improve focus on what you owe But‐
• NEVER mix Traditional and Roth IRA accounts • Multiple similar accounts can make it difficult to understand asset mix and diversification • Fewer accounts may make it easier for overall planning • Larger balances may decrease fees from investment/brokerage firm • Larger balances may qualify you for additional services
– May have credit consequences due to lowering total of available credit – Investigate options before making changes
• Check your credit report for forgotten accounts https://www.annualcreditreport.com 39
40
Planning Ahead for Required Minimum Distributions(RMD)
Planning Ahead for Required Minimum Distributions (RMD)
• At 70½, you must begin taking RMD for 401K and traditional IRA accounts • Huge tax penalty if you do not take the correct amount • If an inherited non‐spousal IRA, you must begin taking within the year after the death or pay penalties
• Multiple accounts increase likelihood of errors • Incorrect distribution results in a 50% excise tax on the amount not distributed as required • RMD determined by IRS life expectancy table
41
42
7
Declutter Your Financial Life Provided By: University of Florida/IFAS Extension February 23, 2016
Now That You Are Organized… (or at least can find documents)
Start Tracking Your Net Worth
• Take a look at your overall financial picture
• • • •
– Congratulate yourself on what you have accomplished – Determine how you will stay organized – Review your financial goals
Shows the big picture of your finances Shows your progress from year‐to‐year Helps with overall financial planning Resources to learn more: – http://www.americasaves.org/for‐savers/savings‐ tools‐and‐resources/personal‐wealth‐estimator – https://ag.tennessee.edu/fcs/Pages/Money/NetW orth.aspx
• Are you on track? • Any changes?
43
44
Stop Delaying, Get Started! • • • • •
Declutter by category Take it a step at a time Be decisive Analyze Strategize Take Action Enjoy the reduced stress of less clutter in your home and finances
46
8
Extension Service
Declutter Your Financial Life
• Nationwide educational network • Each state and territory – Land‐grant university and a network of local and regional offices.
• Reaching out – Research – Education – Extension
2
University of Florida Extension • Partnership between University of Florida & County Governments – All 67 counties in Florida have an Extension presence – Most have a Family & Consumer Sciences Agent
4
Webinar Team
Dr. Michael Gutter, University of Florida, Associate Dean, State Program Leader for 4H Youth Development, Families and Communities
Julie England M.S.,CFCS Lake County Extension Agent [email protected]
Florida Master Money Mentors
Lisa Leslie, M.Ed., AFC® Hillsborough County Extension Agent [email protected]
• • • • •
Provide 1‐1 education Developing spending plans Organizing financial records Understanding credit & debt Planning for the future
5 6
1
Declutter Your Financial Life Provided By: University of Florida/IFAS Extension February 23, 2016
America Saves
15 Week America Saves Challenge • Pick a challenge plan
• Pledge to be a Saver and receive free personal finance updates and info about upcoming programs • Non‐commercial, no sales offers • In Hillsborough County www.TampaBay.Saves.org • Other parts of Florida www.FloridaSaves.org
– Basic Challenge – Hard Core Challenge – Financial goal of your choice – Track your progress – Submit your results and you could win a gift card prize – Feb 21 – June 4
• Register http://bit.ly/15WeekMoneyReg 7
Today’s Program
Declutter Your Financial Life
• Organizing your documents • Getting rid of what you don’t need • Organizing your financial accounts
10
9
Two Philosophies of Decluttering
Last Time
Organization
• Cost of Clutter
• Organize your space and possessions
– Financial – Time – Health • Physical • Mental Pixabay.com
Archived Declutter Your Life webinar: https://attendee.gototraining.com/878nx/recording/1453755954463534081
Simplicity • Minimalist viewpoint – Focus on needs, not wants – Spend less – Own less – Reduce carbon footprint – Focus on experiences, not things
Pixabay.com
11
12
2
Declutter Your Financial Life Provided By: University of Florida/IFAS Extension February 23, 2016
Potential Financial Consequences • Reduced ability to plan for the future • Tax consequences • Misplaced bills can result in late fees, lower credit scores and other problems • Crisis purchases increase spending • Cluttered homes sell slower and for less $$$ • Renting storage space can cost over $1000 year
Clutter is a delayed decision
13
Where is All This Paper Coming From? • Switch to e‐delivery of financial statements and bills • Open mail next to wastebasket or shredder • Reduce unsolicited credit, pre‐screened credit card and insurance offers
14
Step‐by‐Step Method
Analyze
Strategize
Take Action
– www.optoutprescreen.com – 1–888–567–8688
• Get name removed from junk mail lists – www.dmachoice.org 15
Step 1 – Find Your Documents
16
In Materials Section
• Where are they? – Filing cabinet? – Bill drawer? – Spread all over the house?
• What do you need? • What don’t you need to keep? • How long do you need to keep documents?
17
18
3
Declutter Your Financial Life Provided By: University of Florida/IFAS Extension February 23, 2016
Step 1: Analyze the Situation • • • • • •
Step‐by‐Step Method
What bothers you the most? What works? What’s not working? What’s essential? Why do you need to improve the storage? What’s causing the problem?
Analyze
Strategize
Take Action
19
20
Getting Started
Step 2 – Plan Your Strategy • Where will you store? • What if anything do you need to purchase • Is your plan sustainable (i.e. can you stick with it month‐to‐month) • Are your documents secure? • Do you need redundant copies?
• • • •
Most recent Easiest What bothers you the most Organize one category at a time, then move to the next on
21
22
Sort By Category
Organizing for the Long Haul
Monthly bills, pay stubs, bank statements Tax forms, documents, donations, etc. Investment documents Warranties and user manuals Policies, deeds and contracts Permanent records – birth certificate, passports, will, marriage license, etc. • Miscellaneous documents
• • • • • •
• • • • • •
Establish your work space Have storage for files Good lighting Comfortable chair Secure Involve Spouse/partner – adult children??
23
24
4
Declutter Your Financial Life Provided By: University of Florida/IFAS Extension February 23, 2016
Spouse/Partner
Keep or Toss?
• Need to know: – Location of important documents – Passwords – How to access accounts if primary bill payer is incapacitated or dies
• Communication is vital • Do you have needed estate planning documents? • If single, who has power of attorney etc. 25
26
Storage of Home Files
In Materials Section
• Current files: day‐to‐day records – bank account information, bills and receipts, loan agreements, some medical information
• Permanent files: on‐going records used infrequently – employment and education records, health benefit information
• Dead storage: anything uncomfortable discarding Store in less accessible drawers or boxes – old tax records, real estate you’ve sold
Legally Secure Your Financial Future was developed by a team from six land‐grant universities as part of the Cooperative Extension Financial Security in Later Life national initiative. For more information go to: http://articles.extension.org/pages/11477/legally‐secure‐your‐financial‐future
Source: Legally Secure Your Financial Future: Organize, Communicate, Prepare
28
27
Discard Monthly
Keep for 1 Year • Paycheck stubs
Unless needed for tax, business or proof of purchase: • Credit card receipts after they appear on statement • Grocery, ATM, debit card receipts after they appear on bank statement
– Save until you compare with W‐2 and Social Security earnings statement
• Canceled checks – Throw out unless needed for tax purposes or can be retrieved online
• Bank statements – Throw out/shred unless needed for tax purposes or can be retrieved online
• Quarterly investment statements – Double check with year‐end statement then discard/shred
29
30
5
Declutter Your Financial Life Provided By: University of Florida/IFAS Extension February 23, 2016
How Long to Keep Tax Records
IRS says‐‐‐‐
• Income tax records, worksheets, and documentation of deductions – IRS recommends 3‐6 years
• Keep records as long as needed for administration of the IRS code • Tax records often useful in situations where financial history is relevant
Source: Internal Revenue Service, Pub 552
31
Do Not Toss • Birth and death certificates • Marriage licenses and divorce decrees • Social Security cards • Military discharge papers, including spouse even if deceased • Immigration documents
32
How Will You Store? • Files • The “Cloud” • Computer
• Pension plan information from current and former employers • Estate planning documents • Life insurance policies • Titles for property still owned
– Make sure to transfer to new forms of storage – Always have backup copies in case of crash or degraded files
• Do You Know Your Digital Assets? Barbara O’Neill, Ph.D., CFP® – http://articles.extension.org/pages/72 624/do‐you‐know‐your‐digital‐assets 33
34
Digital Assets Inventory Worksheet
Grab and Go Box Emergency preparation Safe deposit keys Inventory list Emergency contact list (update mobile device) • Copies of insurance policies • Copies of identification records and health insurance
• • • •
35
Source : Keeping a Household Inventory & Protecting Valuable Records, http://edis.ifas.ufl.edu/dh138
36
6
Declutter Your Financial Life Provided By: University of Florida/IFAS Extension February 23, 2016
Declutter Your Financial Accounts
Financial Accounts
• Do you have multiple
• The more accounts you have, the more potential for fees • Investigate the cost of consolidating before making any changes • More potential for errors • Increased chance of identity theft
– Bank accounts – Credit cards – Investment accounts
37
Credit Cards • • • •
38
Investment Accounts
Do you need/use your cards? Consolidation may lower fees Improve focus on what you owe But‐
• NEVER mix Traditional and Roth IRA accounts • Multiple similar accounts can make it difficult to understand asset mix and diversification • Fewer accounts may make it easier for overall planning • Larger balances may decrease fees from investment/brokerage firm • Larger balances may qualify you for additional services
– May have credit consequences due to lowering total of available credit – Investigate options before making changes
• Check your credit report for forgotten accounts https://www.annualcreditreport.com 39
40
Planning Ahead for Required Minimum Distributions(RMD)
Planning Ahead for Required Minimum Distributions (RMD)
• At 70½, you must begin taking RMD for 401K and traditional IRA accounts • Huge tax penalty if you do not take the correct amount • If an inherited non‐spousal IRA, you must begin taking within the year after the death or pay penalties
• Multiple accounts increase likelihood of errors • Incorrect distribution results in a 50% excise tax on the amount not distributed as required • RMD determined by IRS life expectancy table
41
42
7
Declutter Your Financial Life Provided By: University of Florida/IFAS Extension February 23, 2016
Now That You Are Organized… (or at least can find documents)
Start Tracking Your Net Worth
• Take a look at your overall financial picture
• • • •
– Congratulate yourself on what you have accomplished – Determine how you will stay organized – Review your financial goals
Shows the big picture of your finances Shows your progress from year‐to‐year Helps with overall financial planning Resources to learn more: – http://www.americasaves.org/for‐savers/savings‐ tools‐and‐resources/personal‐wealth‐estimator – https://ag.tennessee.edu/fcs/Pages/Money/NetW orth.aspx
• Are you on track? • Any changes?
43
44
Stop Delaying, Get Started! • • • • •
Declutter by category Take it a step at a time Be decisive Analyze Strategize Take Action Enjoy the reduced stress of less clutter in your home and finances
46
8
