It’s Time For a “FINANCIAL SPRING CLEANING”
Neal A. Deutsch, CFP®
Published in Rivertown Journal, May 2006
As the weather finally warms and the crocus and daffodils bloom, our thoughts go the proverbial spring cleaning: clearing out the old to make room for the new, straightening and organizing, and ultimately getting that feeling of organization and lack of clutter. We go from closet to closet, cabinets to garage, and room-to-room: do I wear it? Do I need it? When is the last time I saw this? Why on earth did I buy this in the first place???
It’s also time to do some “financial spring cleaning:” looking at your state of financial affairs, reviewing each area, and making changes if necessary. Let’s look at some of those areas:
Financial and Investments: If you are receiving statements in the mail and they remain unopened, ignorance is not bliss. You have worked hard to accumulate your assets: nobody cares more than you. Knowledge is power, and nobody has more control over his or her ultimate destiny than you do. Organize your statements and other paperwork sent to you by your fiduciary. Compare them: do they reflect your particular risk tolerance? Are you on track to achieve your goals and objectives i.e.: college planning, retirement, second home, etc. Do you understand your holdings? Have they been recommended by a reliable source, or by a friend who gave you a hot tip? Call your financial professional for a review, and repeat it every six months. The market and your lifestyle are ever-changing entities, and you should evolve with it.
Legal Documents: Wills, trusts, durable power of attorney, living wills and other pertinent legal documents should be reviewed every few years. The tax and estate laws change constantly, as may your individual situations and desires. Occurrences that may necessitate a change may be births, deaths, new acquisitions, marriage or divorce, or any changes that may alter your thoughts on how you would like to plan your estate. Consult your estate planner and attorney.
Insurance: Life insurance is a program that was not designed to make others wealthy, but to allow our family members to live in the manner that they have been living before they lost a loved one or income producing partner. Review your life insurance plan to see to it that you are adequately insured. Remember that too much is not necessary, so the proper way is to evaluate your needs before purchasing your plan.
Homeowners or Renters Insurance: If you are a homeowner, you probably have been dazzled in recent years by the escalating value of your home. But, have you been updating your homeowners insurance along with it? Along with escalating home values comes escalating replacement cost. Make sure that your policy is up to date with the rising market values. For homeowners and renters alike, do an updated inventory of your contents: is your coverage adequate to replace those things you have accumulated throughout the years? A video taped inventory, stored outside the home is a safe way to accurately document your contents. Speak with your property and casualty agent to assure yourself of adequate coverage.
Loans: Loans are not written in stone. Review their terms: when do they mature? What is the interest rate? Can or should they be consolidated? If they are consumer debt (credit card) call the credit card company and negotiate for a lower rate. Just call and ask: You’ll be surprised at how many times they will lower your rate just for the asking. Remember: it’s a very competitive market, and they don’t want to lose your business.
There’s nothing like that feeling of being organized: and hey- the sooner you get started…
Neal A. Deutsch is a Certified Financial Planner™, Registered
Securities Principal and President of Chestnut Investment Group in Suffern,
NY, helping people with financial planning since 1984. Please feel free to
call Neal at 845.369.0016 or email him with your questions at neald@chestnutinvestment.com
Feel free to visit his website at www.chestnutinvestment.com
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