Springtime Money Laundering
By Roger Sorensen, Fri Dec 9th

Summer is right around the corner and most of us have ourto-do-lists figured out, mentally, if not written down yet.Bible camp for the kids, plant a large garden, and a trip to thelake. What about financial housekeeping, shouldn't that be onyour list too? Early summer is a great time to take a financialbreather. The holidays are a long way off, the taxes have justbeen paid and we're spending time eating in the backyard insteadof dining out. If you take even one day out of your summerplay/work and organize your finances, you could cut down on theforest of bills, bank balancing, and paperwork facing you allyear long. Now is even a good time to take a look at yourretirement and investment accounts and check up on yourinsurance coverage.

Getting Started Starting with your bank papers, check out howmany savings and checking accounts you have and minimize them. Ilike to have two checking accounts for the house, one is usedonly for the regular bills and the other is for household itemsand irregular spending. Two savings accounts are enough as well,one for long-term saving and the other for short-term. Anothertime and paper saver is if you set up an automatic deposit ofyour paycheck into your checking account, and then set up anautomatic payment from your checking account into your savings,investment, or IRA accounts. Even if you pay yourself only $10 aweek, it adds up over the year and is a good discipline tolearn. You can even use automatic deposits to save money forChristmas presents, a vacation or other "special occasions". Ifyou are technologically savy and comfortable with the idea ofelectronic payments, consider using e-payments to pay yourregular bills, such as mortgage, electric, or car loan. Don'tlet the companies do electronic with-drawls for you. How do youguarantee that they took the right amount, and if they made amistake (which happens) how do you get the money back? It is alot simpler and potentially safer for you to do an electronicbill-pay through your bank.

Another step In 2001 the Economic Growth and Tax ReliefReconciliation Act made it easier for you, the investor, toconsolidate your retirement accounts and still retain thetax-favored treatment of the money. Prior to this act, advisorsfrequently told their clients to keep retirement accountsseparate to save on taxes. Now you can take eligibledistributions from tax-qualified plans, 403(b) and 457 pensionplans and other types of plans like the IRA, and roll the moneyinto other tax-qualified plans. The purpose here is toconsolidate your multiple plans into one or two accounts.This'll make it easier for you to keep an abreast of what yourmoney is doing. With fewer accounts, you'll have

less confusion,hopefully everything is on one statement and if you havequestions or need to make changes you only have to talk to onerepresentative.

Coverage Checkup Instead of merely simplifying your financiallife, you should also make sure that you are providing adequateprotection. It is a good idea to have insurance on your home,your health, your car, your loved ones, and your income. Don'tforget, though, you can over do it and have too much insurance.You need to decide what level of self-insurance you arecomfortable with. The law requires you to carry automobileliability insurance is required by law. At the least you shouldhave term life insurance to replace your income and help yourloved ones with debt and living expenses. Homeowner insurance isimportant in case your home becomes unlivable due to fire orother incident. Again, if you can get your insurance through oneprovider, your life will be simpler with fewer agents to visitwith. Perhaps you can even have access to your account throughthe Internet. The less effort it takes to understand yourcoverage and to make changes, the less stress and the more timeyou'll save.

Final Items When was the last time you updated your will? If itwas more than a year ago, you might want to do it again. Assetsincrease or decrease, potential inheritors are born, and maybeyou've decided that you'd like to leave a little something toyour church. Updating your will is a good way to make sure yourfinal wishes are carried out. Putting some of your assets in atrust can save on probate costs. Also if you becomeincapacitated the trust can manage funds for people with specialneeds - a child who needs extra care, for example. A trust isalso another way distribute your assets to children orgrandchildren at a specific age, such as when they reach age 25or have children of their own.

Ultimately, you will have to decide just how much consolidationof planners, agents and financial management you want to do.Once you've cleaned house on your finances, spending anafternoon in the hammock will be a lot more restful. Having apeace of mind about your financial affairs is truly a goodfeeling.

About the author:Roger Sorensen is a Financial Author and Speaker, and the editorof Money Basics, a monthly personal finance newsletter foundonline at www.brighterfutures.com. After filling in his own debtpit equal to 150% of his annual income, Roger has turned theexperiance into Brighter Futures, a Financial Literacy company."There is hope for you, no matter how large your debt load mightbe."