6 Ways to Freshen Up Your Finances

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By Holly Perez

Spring has arrived, and so has the inevitable seasonal cleaning duties. In addition to packing away the winter clothes, washing windows and cleaning out the fridge, spring is the perfect time to evaluate your financial situation and tidy up your budget, bank accounts, debts and investments. Here are six ways to spruce up your finances:

1. Refresh your budget. If you've been promoted, transitioned from two incomes to one or are starting a family, this is the perfect time to revisit your household budget. Consider using online personal finance tools to help you set a budget and keep track of your accounts. You'll see where your money is going and can adjust spending where needed to help you attain your financial goals.

2. Pay off holiday debt once and for all. Clear up your credit lines, and pay off the purchases you made over the holiday season. Put yourself on a stricter debt payoff plan specifically to pay off the debt you accumulated over the holidays. Cleaning up this debt quickly will put you in a much better financial position for the rest of the year. It's easy to fall back in to debt, so put a plan in place while you're at it to maintain a zero balance.

3. De-clutter your countertops and go paperless. A good way to cut down on clutter is to opt for electronic bill payments. %VIRTUAL-article-sponsoredlinks%It decreases the amount of print mail and can even help prevent identity theft. Secure your online bill payment with strong passwords that you change on a regular basis. Signing up for a vendor's online automatic pay system (helpful for fixed-payment bills such as cable and Internet) allows you to set up payments as "recurring" so the bills are automatically paid. This can help you avoid forgetting to pay a bill, and it keeps countertops paper-free.

4. Clean up your credit score. Boosting your credit score is always important, but before you do, it's imperative to learn about your credit history and the various accounts that affect it. To make sure your credit report is free of errors, get a free credit report (you're entitled to one free copy from the three credit bureaus every year). Check for any errors or accounts listed that aren't yours. Companies do make mistakes, and it's your responsibility to make corrections when you catch them, so your credit score isn't accidentally lowered.

5. Set up an emergency fund. Life is full of unexpected surprises. A car repair, illness or unemployment can catch you and your family off guard and leave you financially stranded. When the unexpected happens, it's important to have a stash of cash set aside in an emergency fund. At a minimum, it should hold three months worth of your living expenses. If you pay $2,000 a month to cover the basics such as housing, utilities and food, then put aside $6,000 in your emergency fund. If you have dependents, your emergency fund should consist of six months of your living expenses.

6. Dust off your financial statements. Review your bank and credit card statements as well as bills to make sure you're not being charged fees you don't recognize or paying for subscriptions or services you never use. This is also a great time to look at your insurance policies. Some personal finance tools expose fees that are often hidden on statements or buried in the fine print to help you eliminate unnecessary fees and save more money.

Whether it's putting money aside to pay down debt, planning for the future or just getting organized, the changing season is a great time to change up your financial habits.

Holly Perez is a consumer money expert at Intuit and mint.com spokeswoman, a leading Web and mobile money management tool that helps people understand and do more with their money.

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6 Ways to Freshen Up Your Finances

Don't parse every receipt and monthly bank statement, says Wenli Wang, a partner in the tax practice at Moss Adams in San Francisco. "Do some homework, so you know what is deductible and what is not," she says. "When you understand what is relevant to your tax prep, you’ll have a game plan."

"Clients spend a lot of time chasing small deductions. I tell them not to go crazy documenting $5 here or $10 there. Concentrate on bigger expenses that save the most in taxes," Wang adds. "And don’t spend money on unnecessary expenses just to save on your taxes."

Start with one of the many free checklists available. Here are a few from the IRS, its affiliate efile.com, TurboTax, or FreshBooks.

Avoid such audit triggers as running a cash business, claiming large deductions on minimal income, and reporting dependent exemptions for people who may not actually be your dependents for tax purposes, says Ebong Eka, a Washington accountant and author of "Start Me Up: The No-Business-Plan Business Plan."

If you report a business loss year after year, you risk having the IRS declare your company a hobby, says Mark MacLeod, an accountant and chief financial officer for FreshBooks. "Filling in your Schedule C with nice, even, rounded numbers in the hundreds or thousands is another red flag," he adds.

Buy an accounting system that automates your back office tasks, including tracking income and tax-deductible expenses. There are free and low-cost software packages available, too. FreshBooks' MacLeod -- who obviously has a dog in the fight -- advises business owners to steer clear of software that's designed for professional accountants. "If it's too complicated, you won't understand it and then you won’t use it," he says.
Spare your sanity by hiring a professional who will do right by your tax return while you work for your clients or drum up new business. "What is your time worth?" MacLeod asks. "If you're a graphic designer charging $100 an hour or more, do you want to spend hours on taxes?"

Running late and wilting under the pressure? "File an extension," Berger advises. "If you wait until the last minute, you'll make a lot of mistakes and you could miss the deadline anyway."

If you owe money, pay up. Or at least pay part of your liability and get on a payment plan for the rest. "Clients worry about owing money they don't have. But it's important to file your return on time, or file an extension at least," Berger says. Putting it off will only result in fines and penalties down the line -- not a prospect that invites much in the way of zen.

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