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Financial spring-cleaning in 5 steps

The season of new beginnings is a great time to clear financial clutter -- literal and figurative. Here's how to pare down your paperwork and money tasks.

By Bankrate.com

Spring has sprung, an old children's poem goes, which means many people are knee-deep in spring-cleaning -- scrubbing floors, clearing out garages and tossing all the clutter that's gathered over the winter months.

It's also an ideal time to consider sprucing up your financial life.

It's not just about tossing out old paperwork; it's about doing the regular maintenance to ensure that you get the most out of every dollar. A regular checkup can help you get -- and stay -- on track with your finances.

Spring is an ideal time to schedule in a few hours for your financial review. Clearing out the financial clutter won't just make your life simpler; it could save you some serious cash. Here are five good areas to get started.

Banking

What to do: Consolidate accounts, streamline with online statements and bill pay, toss old statements and checks.

Time involved: A solid hour will get the ball rolling, but you may need to follow up during the next few weeks to make sure the changes you've made have taken effect.

Cost: Some banks have small fees to close accounts -- usually less than $30 -- if they've been open for less than six months.

Details: If you've moved a few times, you may find that you have several bank accounts -- and an overwhelming number of monthly statements. "It's easy to keep a bank account open," says Galia Gichon, author of the "My Money Matters" kit. "But the downside is that you may be incurring fees every month, and those can be avoided."

While some financial whizzes use different accounts for different reasons, piling up benefits and perks, most will benefit by streamlining accounts with a single financial institution.

After you've determined which bank best suits your needs, be sure to switch any automatic payment plans to that bank, such as gym memberships, car payments and Internet service -- or risk hefty fees when payments don't go through.

Once you've consolidated the accounts, you may find you've got more cash in your account, so you should check in with your bank to see if you qualify for better deals. You may find that you have better options for online bill payment services, monthly fees or interest rates.

Move your banking life online to cut clutter. You can generally get monthly statements online, and many banks also offer a service that allows you to see your canceled checks online as well. Toss old checks and old statements, because you can get copies of them from your bank.

You'll benefit by paying as many bills as possible electronically. Not only will you save the price of a stamp, but you also can have payments deducted automatically to ensure you never incur a late charge again.

Credit cards/debt

What to do: Check your credit report, shop around for lower interest rates, and come up with a payment strategy.

Time involved: 30 minutes and up.

Cost: None.

Details: A 50- or 100-point change in your credit score can mean the difference between great loan terms and terrible ones, and inaccuracies in your credit report can drag that score down at least that much. Do yourself a favor and double-check it, says MSN Money columnist Liz Pulliam Weston, the author of "Your Credit Score: Your Money & What's at Stake." "You should pull your credit reports from the three credit bureaus, which you can do at www.annualcreditreport.com," she says. See a problem? Dispute it, in writing, and you should have a resolution in about a month.

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Liz Pulliam Weston
How to declutter your finances
MSN Money's Liz Pulliam Weston shares her secrets: direct deposit, account consolidation, overdraft protection and e-mail alerts.

Once you have an accurate credit report, check the interest rates you pay on balances and compare the rates with other cards. You may be able to use that as leverage to improve your credit card terms. Credit card companies are happy to use any opportunity to raise your rates, but that doesn't mean you should just accept it. If you have a history of making payments on time, give your credit card companies a call and ask if they can do better with their rates. Many will drop them if you just take the time to ask.

Finally, develop a plan to pay off any debt. Tackle high-interest credit card debt first to guarantee the best bang for your buck, says Kim Lankford, a contributing editor at Kiplinger's Personal Finance magazine. Any tax return you've got coming can help you make a big dent in your debt, so consider paying it off before blowing it on the latest gadget or a luxury vacation.

Continued: Plan your estate

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