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Simplify Your Personal Finances

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One of the benefits of creating my Personal Finance Users Guide was that I learned that we an overabundance of unused bank accounts and credit cards. In years past, each one had their purpose but have since been made obsolete. For example, one is a credit union near my home town that linked my finances with my parents and was important while I was in college. Having graduated many years ago, this link has become less and less important.

Another example is a credit card I had in college that never kept up with the times in offering competitive cash back (Discover). Yet another is a credit union account at my former employer, one I kept just to have a local credit union account available (they have extremely good loan rates). However, for each, their time has passed and they need to be shut down.

Simplify!

That’s the mantra for the next few months of my life when it comes to personal finances. One of the things that comes with marriage is the inevitable doubling up of the essentials. A great non-personal finance example would be beds. Every person needs a bed. This inevitably means that when two people get married, you have two beds when you only need one. The same applies for bank accounts and credit cards. She has accounts at a bunch of banks, I have accounts at a bunch of banks, we certainly don’t need them all! (read this discussion about coupled finances and combining accounts, it’s a hot button issue!)

So, we’re getting married this weekend and then going on a much needed vacation honeymoon. When we get back, we’re going to start paring down all of these accounts and getting down to the basics.

Final Thoughts

Some would argue that you shouldn’t cancel your credit cards because it will affect your credit score (read this Devil’s Advocate post arguing otherwise), I say that simplicity is more important than a few points. If you can swing it, try consolidating your cards rather than canceling them. Closing bank accounts doesn’t appear to have a publicly recognized negative effect on your credit, so cut those away at will!

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3 Responses to “Simplify Your Personal Finances”

  1. Tyler says:

    Jim,
    Congrats on your big day.
    Couples finances is a hot button issue. My wife and I use separate savings and chequing accounts for our funds. We then use a percentage formula (I make 60% of the total income and she makes 40%) to figure out how much of the common bills that we are each responsible for (Mortgage, power, gas, cable etc.)
    The amount that we each have left over after the common bills are paid is our individual allotment to do as we please (Save, invest, spend).
    It works for us and has helped us avoid many fights as I am very frugal and my wife likes to shop!

  2. You won’t regret making things more simple. Congratulations btw!

  3. T. says:

    Not only simplify, but track all the information in a single location. Over the years, you will have multiple bank accounts, credit cards, 401Ks, IRAs, savings bonds, weird stocks you end up with because something in your portfolio spun off. . .and in the end, if you don’t keep an eye on it all, you can end up forgetting about something. At least once a year, I see a news article about the money people left in abandoned bank accounts.

    We started simplifying a few years ago. When my husband’s parents began to get to the point where they couldn’t manage their finances anymore, we took over. This was a couple that had joint accounts for over 50 years, he had a single employer for over 33 years before retiring. They were Depression babies who always lived like the next Depression was right around the corner. Their debts were few, but their finances were a mess. Multiple tiny accounts and too much money in non-interest accounts. Lots of dinky stock holdings they didn’t even know they had. We had to research stocks they bought in the forties that had changed names & split multiple times. We even found a safe deposit box they had forgotten about that had several pieces of jewelry and some important papers. We found insurance policies they didn’t know they had. As simple as their lives were, the sheer impact of time had made things complicated.

    We never want our kids to go through this, so we’ve been in simplification mode for awhile. Start now and you’ll never regret it.


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