Financial Spring Cleaning

By Kevin GibbonsWith spring bursting out (or imminent) across the country, now is the time for Spring Cleaning. But I’m not just talking about shaking our carpets, putting away comforters and storm windows. While you’re performing all those traditional seasonal rituals, set aside some time for financial spring cleaning. Now is the time to go through your routine, recurring expenses and determine if they are appropriate.Do you have a gym membership that has languished all winter long? Or a streaming service for channels that you only used once in the past six months? When was the last time you checked your auto insurance for a competitive quote? Take the time to look at all those areas.Creating a Value PropositionThe first step in conducting your spring cleaning is to gather the information. Pull your last three bank and credit card statements and make a list of your recurring expenses. These are the bills that you pay, either automatically or manually, every month. Identify the item, the average monthly cost, and the average usage. So, continuing with the gym example, you might have “Gym,” “$250,” “1/month.”Once you have the list, you can go through it and look at each item, deciding if you are getting the right value from it. There are several questions you can ask for each item:

• Do I need this product or service? What happens if I don’t have it?
• Do I want this product or service? Does it make my life easier or more enjoyable?
• Am I using the product or service at a level commensurate with the cost?
• Is there a less expensive alternative that will achieve the same purpose?
• If I wasn’t to spend my money on this, is there something more valuable I could be spending it on?

Once you have checked each of your expenses against this list of questions, it’s time to take action! Contact your providers of essential services (like insurance, telecommunications) and ask for better deals. But, rather than just asking for a lower price, you may be able to negotiate for a lower price for a lower level product. (For example, you may determine that you really don’t need 10 G of data capacity for your smartphone when you’ve only used 2 G/month for the past 3 months…). As your car gets older, you may be able to lower your comprehensive insurance to what you would reasonably collect, rather than the original purchase price.It’s About What’s Important to YouThe core philosophy behind The Savvy Life is saving on those things that are not so important to you so you can spend on those things that are important to you. A value proposition is a personal decision. What is important to me, what I’m willing to pay for, may be very different than for you. That’s OK. The idea behind this “spring cleaning” is to look at your own expenses and make sure they line up with your values. If you are OK with paying for a gym membership that you use once a month, that’s fine. Just make sure that you are making a conscious decision about it, rather than paying the money every month out of habit, without being aware of it.Spring cleaning is about tidying up from the past and preparing for the future. Whether you are putting away the flannel sheets and pulling out the lawn furniture, or eliminating underused services and tightening up necessary expenses, now is the time to address these issues so you can enjoy the months ahead.Cleaning is a Sign of RespectThere is another aspect of spring cleaning that applies to both the home and your wallet. Just like you need to deep clean your carpets, or wash and polish your floors, every so often, you need to show your wallet or purse some respect and attention. Take this opportunity to clean out your wallet or purse. Make sure you only have items that you really need in there. Clean out the compartment that actually holds your money so the bills will fit flat and orderly. Get rid of expired credit and membership cards. Update your insurance cards. (This is also a good time to check for the expiration date of your driver’s license or state identification. You want to schedule that renewal at your convenience, not rush around two days before the card expires.)