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How to Hard Reset Your Financial Life
Posted By Jim On 07/08/2009 @ 7:17 am In Personal Finance | 15 Comments
We have twelve bank accounts.
You read that correctly, we have twelve accounts.
Ally Bank, FNBO Direct, ING Direct, HSBC Direct, Bank of America, M&T Bank, … the list goes on.
We also have a dozen credit cards. Citi, Discover, Capital One, … again, the list goes on.
We have so many accounts because we’ve slowly acquired them over the course of the last ten years. Our financial network map is an intricated mess despite our best efforts to simplify our personal finances.
That’s why we need to hit the reset button on our financial life.
How do you hit the hard reset? You wipe it all away and start over.
You start by drawing your ideal financial network map . Imagine a world in which you have one or two credit cards, one bank account (checking and savings), and one broker (retirement or taxable account). How would that look?
Probably like this:
What is this simple system missing? Perhaps an online savings account with a higher interest rate? Add that in.
Anything else? Repeat this process until you have the simplest network you possible can, being as specific as possible (use bank names, use card names)
Now, how do you get your current financial network map to look like your utopian financial network map?
Create an action plan to get from your current map to your ideal map. This will be a simple list of steps you’ll need complete to consolidate everything down to the absolute basics. It’ll look something like this:
Then do each step on the map until you’re done!
I call this a hard reset because you’re starting from scratch. With this approach, you can build a system that is both simple and works for you. This afternoon, I’ll show another approach that is similar. I call it a “soft reset” because you don’t start from scratch, you simplify your network until you reach that ideal map.
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 financial network map: http://www.bargaineering.com/articles/financial-network-map.html
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