Fix your finances in a day

Setting aside a vacation day to focus on personal money tasks could end your procrastination and save you -- or make you -- quite a bit of money. Here's how.

By Liz Pulliam Weston
Article published on MSN Money

Money blogger J.D. Roth of Get Rich Slowly floated a great idea a few months ago: taking a personal "Money Day" to fix whatever's wrong with your finances.

Roth was inspired to write about the idea after taking a few hours off work to finally close his checking account at a much-hated bank and open one at a consumer-friendlier credit union. (For more on why switching may be a good idea, read "Ditch your bank for a credit union.")

"It was one of the best financial decisions I've ever made," Roth wrote. "If I could solve one financial problem in a few hours, just imagine what I could do with an entire day."

Talk back: What would you tackle during a day off devoted to finances?

Think about it: Most of us have way too much to do and too little time to do it, so difficult or mundane tasks often fall to the bottom of our task lists. Because financial chores can be both difficult and mundane, it's easy to put them off indefinitely, even though doing so can cost us.

Wouldn't it be nice to stop telling yourself you'll fix your financial problems when you "have the time" and actually get it done?

You could continue trying to work such tasks into a regular day or use the 24/7 availability of many online resources to do it on a weekend. But Roth argued for taking vacation time from work and devoting an entire weekday to the task. Not only are you more likely to have access to all the resources you need, but using up a day of paid leave time helps up the ante -- you'll want to make sure the day pays off for you.

Focus on the biggies
Here are some chores you might check off your list:

Set up a high-rate savings account. Having a savings cushion is a great idea in any economy but particularly smart when a downturn may be ahead. Typical banks pay less than 1% on their FDIC-insured savings accounts, but online banks may offer several percentage points more. You can find the highest-paying institutions using the tool at MSN Money's banking center. Once your account is set up, you can arrange an automatic transfer from your brick-and-mortar checking account.


If your resolution this year is to firm up your finances, Liz Pulliam Weston has some tips to boost your credit scores.

Start tracking your spending. If you don't know where the money goes, find out. You can:

Carry a notebook and pen to write down every expenditure.

Use personal finance software such as Money or Quicken to download your bank and credit card transactions into your computer. (Both offer free trials, Money for 60 days and Quicken for 30.)

Try an online tracker like Wesabe, Geezeo, Mint or Quicken Online. The first three are free; Quicken Online charges $2.99 a month after a 30-day free trial.

Once you know where you're spending your money, it's easier to find places to trim so you can redirect the money into debt repayment or savings.

Microsoft Office Online: Learn how to use Excel to track your banking and spending

Get a better interest rate on your credit cards. If you have credit card debt, paying it off should be among your priorities. That's easier to do if your interest rates aren't in the ionosphere. Read "Get a better deal . . . with a threat" for tactics that consistently win rate cuts for folks who have good credit. If your credit is bad or you've already fallen behind on your minimum payments, you may need to make an appointment with a legitimate credit counselor (read "The consumer's guide to credit counseling") and/or an experienced bankruptcy attorney to discuss your options.

Find a better rewards card. If you pay off your credit card balances every month, then make your diligence pay off with a card that matches the way you spend and the way you like to be rewarded. Read "The 15 most rewarding credit cards" to see which plastic leads the pack.

Continued: Fine-tune your 401(k)

Roll over those old 401(k)s. Change jobs a few times and you can leave a litter of 401(k) accounts behind in your wake. See if you can transfer the old accounts into your current employer's plan (that means a call to Human Resources) or roll them into an individual retirement account. Any brokerage or mutual fund family will help you with the paperwork to transfer the money into an existing IRA or set up one. Not sure where to start? Charles Schwab, E*Trade or TD Ameritrade can be good discount brokerage options, or try Vanguard, Fidelity or T. Rowe Price.

Look at retirement planning
Re-balance your 401(k). Many people pick their 401(k) investment options more or less at random and then never alter their haphazard choices. This approach can leave you overexposed to risk, hurt your returns or both. It's smarter to pick an asset allocation that reflects your tolerance for risk and time until retirement, then periodically re-balance. (Re-balancing means moving your investments around to restore the mix of stocks, bonds and cash to your original target mix.)

You can find answers to many of your 401(k) questions in MSN Money's Fast Answers, and MSN Money's 401(k) Quick Check will compare your available funds' performance and risk records. Your company may offer advice on its own. (See "Even bad 401(k) advice is better than none.") If your company doesn't provide investment help, you can find you can get specific fund recommendations from FinancialEngines.com for $39.95 a quarter.

Or you can take the easy way out and put all your money into your plan's "life cycle" or "target date maturity" fund. These funds pick the investments and asset allocation, re-balancing as necessary. For target-date funds, look for names like Retirement 2015 or Retirement 2030, which are supposed to align with the year you expect to retire. (Here is a list of Morningstar top-ranked funds with target dates 2000 to 2014, from 2015 to 2029 and 2030 and beyond.) Life-cycle funds tend to keep a steady asset allocation over time and may be divided into "conservative," "moderate" and "aggressive" options, while the target-date funds typically reduce risk exposure over time. Vanguard, Fidelity and T. Rowe Price offer well-reviewed funds of this type; if your plan doesn't have one of their options, look for a life-cycle or target-date fund with an expense ratio below 1%.

Getting around to insurance, college, wills
Raise your deductibles. One of the easiest ways to save money on car, home and even health insurance is to agree to pay more out of pocket before your coverage kicks in. If you have no savings, you might want to skip this step for now, but read "3 costly myths about insurance" to understand why savvy consumers choose higher deductibles and pay the smaller expenses on their own as soon as they can.

You might even reconsider whether you need anything more than liability on your car at all. (See "Drop the insurance on your clunker.")

Get some insurance quotes. Shopping for insurance is a pain. There's no way around that. But because you can potentially save hundreds or even thousands of dollars, it's worth the effort at least every few years. You can get an individual online quote for auto insurance, life insurance, health insurance or homeowners insurance, or you can check out sites such as Insure.com and Insweb.com. Have your current policies nearby. Note which insurers have been advertising heavily in your area; they might be offering breaks as well.

Set up a 529 college savings plan for your kid. Your financial priorities should be saving for your own retirement and paying off any toxic debt (credit cards, payday loans, etc.). But as college savings expert Joe Hurley of SavingForCollege.com notes, it's also a good idea to get into the habit of saving for your children's future education, even if it's just $25 a month. Fortunately, 529 plans will let you start with that little (or even less), as long as you sign up for automatic monthly transfers from your checking account. Morningstar.com compiles a list of the best and worst 529 savings plans that can help you decide what to look for (and to avoid). If your state offers a tax deduction, you might want to start with its plan. If you don't get a tax break, you can't go too far wrong with the age-weighted plans run by Vanguard, T. Rowe Price, TIAA-CREF or Fidelity.

Draft a will. If ever a task was designed to encourage procrastination, it's creating a will. But our hard-wired reluctance to consult our own mortality can create a nightmare for those we love -- and sometimes for ourselves (read "3 legal documents you shouldn't live without" for details).

If you have minor children, you need to do this now. Read "Who will take care of your kids if you die?" for the reasons why it's so important to get over your inertia.

If your resolution this year is to firm up your finances, Liz Pulliam Weston has some tips to boost your credit scores.

Quicken WillMaker can help you draft the necessary documents. If your situation isn't complicated, it may be all you need. But if you have a lot of debt, a contentious family, a sizable estate -- say, $1 million or above -- or other complicating factors, make an appointment with an estate-planning attorney for help.

You may have more financial tasks on your list, and getting everything done in a single day may not be possible. So highlight two to four tasks that are the most crucial and knock those out first. When you're done, share the results of your Money Day -- or your plans for the next one --