By: Ellen Rogin | Financial | Action Resources
Does it surprise you to hear that keeping clutter in your life actually limits your prosperity? Here’s why: Every time you stare at messy piles of papers or unopened statements, whether you are conscious of it or not, a thought is running through your mind, “I really should do something about this.” Or, “I hope there isn’t anything important in that pile of unopened mail.” When you worry about what you not taking care of or what you should be doing, you are not focusing on what you want to create.
Free Yourself of Physical Clutter—All That Stuff
Even in a paperless world, most people regularly receive mounds of statements, bills, insurance documents and marketing material. You’re likely also dealing with many other important papers, such as trust and power of attorney documents, home and auto ownership papers, passports, and tax returns, to name a few. Without a system for reviewing information and filing, it’s easy to feel as if you’re drowning in a sea of papers.
You may also have clutter in your finances – such as many accounts in different places for no practical reason. I recently met Terri who shared with me that while she now works for a large company, she used to work at a doctor’s office and before that at a school. She has money in retirement plans at each of her former employers plus she has four different IRA accounts. She knows there is no logical reason to maintain all these separate accounts. All those statements drive Terri crazy and she feels like she has no overall picture of her assets or a plan. Like many people, she knows she should consolidate her accounts but just hasn’t made the time to do it.
What’s the Problem with Clutter?
The messes and the worry they cause sap your energy and distract you from focusing on what you want to create.
On a very practical level, mistakes often go uncorrected as a result of disorganization. Errors don’t happen very often, but over the years I have seen examples of errors such as money being mistakenly taken out of the wrong person’s account or of people being charged erroneous fees.
Another compelling reason to get organized: If the IRS ever comes knocking at your door you want to be able to provide them with the information they want to see.
In addition, if something happens to you, your family members and/or friends will greatly appreciate being able to know where to find your important documents.
Is Clutter Holding You Back?
Ask yourself these questions to find key areas of physical clutter:
Do you have piles of unopened mail or papers that need to be filed?
Are you afraid to throw papers away – even though you aren’t sure you need them?
Is there a specific reason to maintain each bank account and each investment account?
If something happened to you, will someone be able to step in and handle your financial affairs efficiently? Will they be able to find your important documents?
Tips for Conquering Financial Clutter
Start sorting as soon as you receive statements and marketing material. Discard any material you do not intend to act upon.
Set up a system for filing statements; this can be as simple as a three-ring binder or file folders in an accordion file. If you maintain your records on line – make sure you have an organized system on your computer to retrieve your statements and important documents.
Establish a system for bill paying. Many people pay bills two times per month. Others write the check to pay a bill when it is received and note the date the bill is due on the envelope where the stamp is usually placed as a reminder to mail their payment. To avoid the stamps all together, set up on-line bill paying through your bank.
Streamline your bank accounts and investment accounts. Streamlining your accounts can help to reduce paperwork and may reduce administrative fees.
Use a Safe Deposit Box
If you do not already have one, consider getting a safe deposit box. As a general rule, only those documents which are irreplaceable or difficult to replace need to be kept in a safe deposit box. Examples of documents which should go in a safe deposit box include: adoption papers, automobile titles, birth certificates, coin or stamp collections, valuable jewelry, and deeds and titles.
Where Are Your Important Documents?
It is always a good idea to make a list of your important documents and note on the list the location of where they are kept (i.e. safe deposit box, file cabinet at home, or file in your office). This will be invaluable if something were to happen to you. Make sure you note on the list who your advisors are, where your safe deposit box is located and where the key is kept. Put a copy of the list in the safe deposit box, and –important – give a copy to a trusted family member or friend. Also establish a secure system for communicating passwords for online accounts.
Free Yourself of Mental Clutter—All That Chatter
Is your clutter less about dealing with paperwork messes and more about a real financial mess that you have yet to handle? Maybe you have a tax return that was never filed or a medical claim that was never made? How about an investment that went badly that you are still beating yourself up about? This type of clutter we call mental clutter because you carry it constantly in your mind.
Mental clutter can be more subtle and perhaps initially harder to spot. How does it show up? Look for a repetitive problem that you haven’t taken action to correct, like a recurring physical ailment for which you haven’t scheduled a doctor’s appointment.
Most people have at least one financial mess or responsibility they know they should take care of, but have not. For some people, it is updating (or establishing) wills or trusts. For others it might be reviewing their insurance. Whenever there is a financial task you have not yet done (but know you should) there is energy being wasted. Attention is being focused, whether you are aware of it or not, on what has not been completed, rather than on more productive things.
This is the kind of clutter that stays in the background of your mind because it doesn’t get resolved. In short, you are mentally carrying a pile of things you tolerate.
Cindy, for example, was so embarrassed and scared about her financial situation she was paralyzed. Early in her career as a web designer, she did contract work for a large company. Although brilliant and talented at her work, she was inexperienced at running a business and didn’t realize she was required to reserve some of her income for taxes. She spent her consulting income and when April 15 rolled around she found out she owned the IRS $38,000, which she didn’t have. She hired an accountant who tried to work this out for her. As she tells the story, “He judged me and advised me to pursue a strategy I knew intuitively would cause bigger issues with the IRS. I told him this but he didn’t listen. I ended up having a lien put on my bank account and the IRS taking all of the small amount I had managed to save.” The next year, still not having money to pay taxes, she avoided filing a tax return altogether. She did the same thing the next year and the next. Understandably, Cindy had a difficult time growing her business. She lived in constant fear that the IRS would take whatever she earned. She felt incredible shame about her situation. Cindy is really smart but ended up in a situation that made her feel stupid.
When she finally called Ellen for advice, she said, “The terror and worry finally got so great that it outweighed my shame about the situation.” Calmly listening, Ellen realized what Cindy needed was a smart and nonjudgmental accountant to help her move ahead. Within forty-five minutes, Ellen called an accountant she thought would be a good fit for Cindy, Cindy contacted the accountant, and she was on the path to getting out of a bad situation.
It’s tempting to get judgy about Cindy not filing her taxes, but most of us have avoided something somewhere along the line that we knew we should’ve take care of. It might not be as dramatic as this, but we all have things we could do better. If you find yourself stuck, confused, or really worried, consider reaching out to someone to help. You might have to try a few times to find the right assistance, but the right person is out there for you.
Is Unfinished Business Nagging at You?
Ask yourself these questions to spot areas of mental clutter:
When you make a financial decision, do you hear your parents’ or other authority’s voices repeating a message? What is that message they gave you about money? Did you receive messages about becoming financially independent? Were they scarcity-focused or prosperity-focused? The idea is not to blame anyone.
Is there a decision you have been putting off making or one for which you continuously gather information?
Are you hanging on to an investment for emotional reasons as opposed to logical ones? For example, if you inherited a stock from Aunt Sally and don’t want to sell it because she loved this stock, you might not be using good judgment! Look at the real reason that motivates you to keep an investment.
Is there someone or something you need to forgive about a financial matter or resentment concerning money you need to discard to clear your mental clutter?
Tips for Clearing Your Mental Clutter
Take charge of unfinished financial responsibilities. List unresolved, uncompleted issues you have been worrying about for 30 days or more. Pick one issue per week and take action to resolve it.
Update (or establish) your estate plan
Take an assessment of your insurance coverage.
Review your retirement accounts. Do the beneficiaries still make sense or need updating?
Whenever there is a financial task you have not yet done (but know you should) there is energy being wasted. Attention is being focused, whether you are aware of it or not, on what has not been completed, rather than on more productive things.
The more you collect any kind of clutter, the more possibility of being stuck, and less opportunity for the energy of prosperity to appear in your life. You will leap out of a static place when you remove your clutter. Cleaning up your financial house, a sort of financial feng shui, will create a sense of increased control and will speed up movement toward attaining your financial goals.