7 Tips to Clean Up Financial Clutter

Identify Financial Clutter You can't clean up financial clutter if you don't know where it is. That's why the first step is to make a list of all your financial accounts, credit cards, and other assets and debts. This balance sheet, of sorts, shows what you own and what you owe and can help you figure out what you don't need."Set up a foundation that establishes where you are: Make an inventory of accounts and a balance sheet, and then say, 'These can be consolidated. These are redundant. I don't use these. I didn't realize I had that,'" Ciccotello says.

Consolidate Bank Accounts

Most people need only one or two bank accounts, perhaps one at a national or regional bank and another at a regional bank or credit union, says Ronit Rogoszinski, a wealth adviser at Arch Financial Group in Long Island, N.Y. More accounts mean only more paperwork, fees and exposure to identity theft. Forgotten accounts can be declared abandoned and confiscated by the state.

To clean up your bank accounts:

• Make a list of the accounts.
• Research which offer the best services at the lowest cost.
• Stop or transfer any automatic deposits or payments on the less attractive accounts.
• Instruct the financial institutions to close those accounts.

"A lot of banks have decreased overdraft protection or eliminated it, so you want to maintain that relationship with a bank that lets you maintain that line. Even if you don't need it, you want to hang onto it because getting that today is very hard," Rogoszinski says.

Get Rid of Credit Cards

Closing credit accounts can hurt your credit score. But your score shouldn't be the only consideration in whether to close accounts you don't need. Use a few major credit cards responsibly and close other accounts to free yourself from paperwork, advertising catalogs, identity-theft risk and the temptation to overspend.

To clean up the clutter:

• Make a list of your credit cards in order of the highest to lowest interest rate.
• Transfer balances from the highest rates to the lowest.
• Close the high-rate accounts.
• Make more-than-minimum payments on the low-rate accounts.
• Monitor the rates until the balances are paid off.

Don't be deterred by the stumbling blocks and special offers that credit card companies use to prevent account closures. Instead, "hold on, be persistent, ask for written confirmation that the account has been closed and then follow up and look for the closed account on your credit report," Ciccotello says. Repeat this line -- offered by Rogoszinski -- as many times as necessary to get the result you want: "Thank you, but I need to close this account."

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