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Plan Well, Retire Well

Saving and investing your money

Simplifying Your Financial Life


There are times when managing my finances doesn't get in the way of the rest of my life. And then there are times when there's just too much going on, and I want everything in my life to be simpler!!!

I can set up many of my bills to be automatically deducted from my checking account, or even billed to a credit card. I'll never be late paying, but I have to be absolutely certain that there will always be enough money in the account to cover the bill. Also, these agreements have to be cancelled and re-established if you change checking accounts.

If they are billed to a credit card, I'd better be paying that card off in full every month. If I don't, I've just added a lot of interest charges to my monthly bills even though I "paid" them on time. And every couple of years, I have to provide new credit card information for each of these bills, because the old card expired.

I am partly responsible for handling my father's finances. Having most of his bills automatically debited from his checking account means my sister and I will never slip up and forget to pay. That would be embarassing to explain to my dad.

My investments are pretty much on auto-pilot. I have money taken out of each paycheck for my 403(b) retirement account. Once a year, I look at my investments to see whether the balances still match the asset allocation I've chosen (XX% in large US stocks, XX% in bonds, XX% in foreign stocks, etc.) If not, I either shift money from one investment to the other (that's known as rebalancing) or adjust how my new contributions will be invested. Some retirement plans now offer automatic rebalancing. That would work best if all your money was in one account, but my husband's and mine are spread across his 401(k), my 403(b), and two IRAs. So for now, there's no automatic rebalancing for me.

I have simplified our investments by choosing mostly index mutual funds. Unlike actively managed mutual funds, I don't have to worry if the fund manager changes or watch to see that the fund doesn't gradually change it's spots (i.e., small US company stocks) to stripes (mid-sized or larger US company stocks). An added benefit is the lower costs of index funds compared to others.

Some of the things that make our financial life more complicated are a result of my stinginess and desire to maximize the benefits I get. We have one credit card that pays a higher rebate for groceries, gas, and prescriptions. We have another credit card that pays a higher rebate for travel expenses and dining out. We pay both off each month, so we don't have to worry about whether we're incurring interest charges to get these benefits. But then one of the cards will change its rebate structure. Or we're driving into Canada and I'm trying to remember which one charges less (or maybe nothing) extra for foreign purchases. You can drive yourself crazy with this stuff!

Shopping online can be a time saver as well as a money saver. But sometimes, I can spend 45 minutes comparing shipping, sales tax, and price - when it only makes $3 difference in what I pay. Did that simplify my life any?

I still balance my checkbook, and check my credit card statements against my receipts each month. I even download those statements into a software program that lets me see where our money is going. That will go smoothly until next time I have to upgrade the software or open a new financial account that I have to set up to access via the software. I thought about giving this up. But when you start worrying about being laid off, or think about retiring, having real numbers about how you spend your money is valuable information.

Do you have tips about how you're simplified your financial life? Please share! Click on my name below and drop me an email. I'd appreciate hearing from you.



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