How to spring clean your wallet

Before you go, we thought you'd like these...
Spring Cleaning Your Financial Documents


As the grass turns green again, and the days get longer, many Americans are undergoing their annual ritual of spring cleaning. Not only is this habit healthy for your household, but it can also make sense for your wallet. Here are some tips on how to do it.

1. Pay Down Your Debt

About half of all American credit card users carry debt on at least one of their credit cards. And as unsecured debt that is never tax deductible, credit card debt can be surprisingly costly. So this spring, it's a good idea to take a look at all of your credit cards and see how much debt you have, and what interest rate you are paying on each account. Over the winter, the prime rate rose by a quarter point, which has prompted some issuers to raise the interest rate of credit cards with variable rates. If you are unable to pay off your debt within a few months, it may be a good idea to open a new credit card with 0% interest for balance transfers.

2. Examine Your Credit Limits

Another thing you can look at this spring is the credit limit of each card you have. If you find yourself regularly using more than 30% of your credit limit, you could be hurting your credit score by having a high debt to credit ratio. This is the ratio of your total amount of debt divided by the sum of your available lines of credit. To alleviate this concern, you can request to have your credit limit raised. To have the greatest chance of being granted a credit limit increase, it can help to pay off as much of your outstanding balance as possible. As the old saying goes, it's as if banks only want to lend money to people who don't need it.

3. Optimize Your Rewards

If you avoid interest charges by paying each month's statement balance in full, then you have the ability to earn rewards for your spending at no additional cost. If that's your case, spring is a good time to re-familiarize yourself with the rewards programs you have for your cards, as they can change over time. Take a look at what types of purchases qualify for bonus rewards, and if there are any limits to the amount of purchases that qualify for rewards.

4. Out With the Old, in With the New

The credit card market is constantly changing, and credit card users continue to enjoy new and improved products from banks and credit unions. So as you go through your credit cards, take some time to see what new credit cards are available, and if their rates, fees, rewards and benefits might be superior to the cards you currently hold. If you find better offers are available, you can sign up for a new card, possibly enjoying a sign-up bonus as well. Then, you can retain your old card or cancel it when the annual fee comes due.

Before applying for any new credit card, remember that it's important to know where your credit stands so you don't apply for cards you're unlikely to qualify for (hard inquiries can drop your credit score). You can check your credit scores for free every month on Credit.com.

5. Re-Evaluate Your Benefits

Most credit cards include a number of benefits that few customers are aware of. For example, your purchases may be covered by an extended warranty policy, have damage and theft coverage, and even be eligible for price protection and return protection. When traveling you may have benefits in the event of trip delays and interruptions, lost and delayed luggage, automobile rental insurance. And if your card is offered in partnership with an airline or hotel chain, then you can expect a number of benefits when making reservations with those companies.

So this spring, take the time to look through your credit cards, and find out how you can receive the most value from them throughout the rest of the year.

Related: 15 things you should stop wasting your money on

16 PHOTOS
15 things you can stop wasting your money on
See Gallery
How to spring clean your wallet

1. Cable TV

With the advent of Hulu, Netflix, Amazon Instant Video, and Apple TV, there's hardly a reason to splurge on a fancy DVR system or even basic cable — so long as you're willing to be patient.

Most shows are added at least 24-hours after airing and some networks won't give them up until eight days.

See some great alternatives to cable TV here.

Via Business Insider

Photo Credit: Getty

2. Bank fees

Banks love to slap you with fees at the drop of a hat, but that doesn't mean you've got to put up with it.

"Consider going with a credit union, which are better than banks in many ways, to avoid some of these fees," says Andrew Schrage, founder of MoneyCrashers.com.

"If you travel abroad often, make sure you use credit cards without foreign transaction fees, otherwise you'll be paying an extra 3% to 5% on all your purchases."

Via Business Insider

Photo Credit: Getty

3. Extended warranties

Retailers push hard to sell you extended warranties — and conveniently pump up their sales figures at the same time.

Don't do it, Schrage warns.

"The only instance I'd recommend a warranty is in the case of a laptop. Otherwise, the warranties themselves can often cost as much as simply buying a used or new replacement for your item, or repairing it," he adds.

Via Business Insider

Photo Credit: Getty

4. The roof over your head

If you're blowing most of your income on a loft in Midtown, you're making a big mistake, says Jeremy Gregg, executive director of the PLAN Fund.

His organization provides loans to low-income entrepreneurs, who Gregg says he often sees spend more than half their income on rent and utilities.

The U.S. Department of Housing & Urban Development recommends spending less than one-third of your income on housing.

Via Business Insider

Photo Credit: Getty

5. Unnecessary smartphone data

"Many of us (including me) pick a cell phone plan, then never check to see if it's the right one for us based on our usage," writes author of "I Will Teach You To Be Rich," Ramit Sethi. "Because the average cell phone bill is about $50, that's $600 per year of money you can optimize."

When buying a new cell phone, Sethi likes to pay a little bit more upfront by choosing the unlimited data and text messaging plan. He then sets a three-month check-in on his calendar, and analyzes his spending patterns after a few months to see where he can cut back.

You can use this method for any usage-based services, he says.

Via Business Insider

Photo Credit: Getty

6. Online shipping

Nearly all retailers offer some sort of option that gets your purchases to your doorstep without additional fees.

Zappos and L.L. Bean are among the rarest breed of businesses offering free shipping on every single purchase, but most companies will demand a minimum purchase.

To help track down deals on shipping, use Freeshipping.org. The site stores information on expiration dates, tells you much to spend to qualify, and lets you search by store name or product.

Otherwise, check out CouponSherpa or Retailmenot, which offer discount codes for free shipping.

Via Business Insider

Photo Credit: Shutterstock

7. Cheap art

Environmental designer Pablo Solomon says picking up knockoff prints and other art is a great way to blow cash for no good reason.

"Nothing sends me through the roof like the art sold on cruise ships and at resorts," Solomon says. "(They're) basically glorified posters being sold as originals."

The best way to score deals on art is to track up and comers, he says. You can nab their art early on and laugh your way to the bank after they've made it big.

Via Business Insider

Photo Credit: Getty

8. Fast food

You're only hurting yourself (and your wallet) if you're feeding yourself out of the bodega around the corner from your home or office.

"I am shocked at how many people live paycheck-to-paycheck and yet routinely spend $10 per day on fast food and convenience store food," Gregg says.

If you're looking for an alternative to brown-bagging it, check out how to shop for the healthiest foods at the grocery store for the least amount of money, and start preparing your own food.

Via Business Insider

Photo Credit: Getty

9. Piecemeal insurance

Buying overpriced insurance for things like accidental death and diseases is an easy way to blow your funds.

"Instead of buying piecemeal insurance policies, get good term life insurance and disability insurance," says Sally Herigstad, a certified public accountant and Creditcard.com columnist.

Take a look at the types of insurance you should buy at every age.

Via Business Insider

Photo Credit: Getty

10. Lousy gifts

Personal finance expert Dani Johnson suggests you think twice before rushing out to buy Dad another tie this Christmas.

"You should make a pact with your friends and family to give back instead," Johnson says. "Pool a percentage of money you were going to spend on gifts and give a secret blessing to somebody who is truly in need."

If you want to buy a great gift without completely breaking the bank, check out these holiday gift ideas for under $50.

Via Business Insider

Photo Credit: Getty

11. Weight loss traps

Weight loss pills and supplements marketed as miracles for overweight couch potatoes are most likely traps.

"Not only are there enough pills and potions that you could start a new one each week, but the negative effects on your health outweighs the money you will waste," says nutritionist Rania Batayneh.

"This is a billion dollar industry and the truth is that a lean body does not come in a pill," Batayneh says.

Via Business Insider

Photo Credit: Getty

12. Lottery tickets

"Sure, you can (buy a lottery ticket) every once in a while just for fun, but never make a lottery purchase with any real expectation of winning," Schrage warns.

"The odds are significantly stacked against you, and why waste your hard-earned money on lottery tickets when you could be saving for retirement or treating yourself to a nice meal?"

Via Business Insider

Photo Credit: Getty

13. Brand new cars

"People get bored with cars quickly. They always want a new car and so they're always dealing with a car payment," says certified financial planner Michael Egan. "But it's a hugely depreciating asset. You don't want to be putting a lot of money into something that's going to be worth nothing after a certain number of years."

Look for used car options, which could save you a substantial amount of money. Check out Kelley Blue Book to get an idea of how much you should pay for a used car.

Another option is leasing a car. You can determine whether or not this is a good option for you by following this flow chart.

Via Business Insider

Photo Credit: Getty

14. Subscriptions

Subscriptions — to magazines, newspapers, and the gym — can add up, and oftentimes, we don't use them as much as we had originally planned.

Sethi recommends implementing what he calls the 'à la carte' method, which takes advantage of psychology to cut our costs.

"Cancel all the discretionary subscriptions you can: your magazines, TiVo, cable — even your gym," Sethi explains in "I Will Teach You To Be Rich." "Then, buy what you need à la carte. Instead of paying for a ton of channels you never watch on cable, buy only the episodes you watch for $1.99 each off iTunes. Buy a day pass for the gym each time you go."

It works for three reasons, Sethi writes: You're likely overpaying already, you're forced to be conscious about your spending, and you value what you pay for.

Via Business Insider

Photo Credit: Getty

15. A morning latte

Author of "The Automatic Millionaire," David Bach, coined the term, "The Latte Factor," which basically says that if you ditch your $4 latte every morning, you'd have quite a bit of money to contribute towards savings — about $30 a week, or $120 a month). Over the course of a few decades, that money could grow substantially.

Rather, invest in a nice coffee maker, even if the price tag is a bit steep. Oftentimes, spending more on high quality items can help you save in the long run.

It can seem counterintuitive to make purchases to save, but that's what some of the most successful money-savers do. They're not just buying things, they're investing in things — tools and services — that will eventually save them money over time.

Via Business Insider

Photo Credit: Getty

of
SEE ALL
BACK TO SLIDE
SHOW CAPTION +
HIDE CAPTION

More from Credit.com
How to Get a Credit Card With Fair Credit
Is Chase Freedom's 5% Cash Back Right for You?
The Best Cash-Back Credit Cards in America

This article originally appeared on Credit.com.

Read Full Story

People are Reading