Money Coach: Gear Up For Financial Spring Cleaning Tax season is here. But before you crunch the numbers and file your forms, it could be an opportune time to do a little spring cleaning - in your pocket book. Money Coach Alvin Hall offers tips on simplifying your money woes and maximizing your earnings.

Money Coach: Gear Up For Financial Spring Cleaning

Money Coach: Gear Up For Financial Spring Cleaning

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Tax season is here. But before you crunch the numbers and file your forms, it could be an opportune time to do a little spring cleaning - in your pocket book. Money Coach Alvin Hall offers tips on simplifying your money woes and maximizing your earnings.

LYNN NEARY, host:

This is TELL ME MORE from NPR News. Im Lynn Neary. Michel Martin is out sick today.

Coming up, the American Academy of Pediatrics recently put out a list of foods that qualify as choking hazards. Not surprisingly, hot dogs are on the list. Sound advice or fear mongering? Writer Lenore Skenazy says the academy should be more worried about dishing up common sense. But first, spring is just a few weeks away and with it, many minds turn to thoughts of flowers in bloom, thoughts of love. For others, the more organized among us, its time to start thinking of spring cleaning, of getting your house in order. We wondered though if there wasnt the financial equivalent of spring cleaning.

So, we turned to our regular financial contributor and Money Coach Alvin Hall. He joins us from our New York bureau. Good to talk to you again, Alvin.

ALVIN HALL: Good to talk to you, Lynn. Two weeks in a row.

NEARY: Two weeks in a row.

(Soundbite of laughter)

NEARY: And I have to confess, I have never even thought about spring cleaning my finances. So, what is it that you would propose to do and why is it important?

HALL: Well, this idea developed when I was filming my television show in Britain. We found out that people were really more motivated in the spring because of the increasing light, the feel good factor associated with the summer coming. They were much more motivated to really tackle financial problems. So, the first thing I said was to sit down and look at your complete financial picture. Make a list of your assets and your liabilities to see where you are going in the future and what youve done well in the past. Many people over the past year or so probably have made a few mistakes. Spring is the time you can say to yourself, listen, I made those mistakes. Ive learned that financial lesson. Now, let me set myself on a new path.

NEARY: All right, give me examples of what you mean by mistakes people have made or the liabilities versus the assets.

HALL: Well, the first thing you should do is look at the value of things that you own. What is the value of your house? What is the value of other assets in your 401K program or your other investments? And what are the things that you owe? Which one of those increased over the past year? Did your liabilities increase because you were paying high interest on a credit card or you had a variable rate mortgage? Its time to sit down and say, now, let the value of my assets start to increase. So, you should take actions to do that. One of the first things that people should do is to consider getting rid of all those high interest credit cards that theyve been trapped into.

Credit cards are one of the ways that Americans waste a lot of money. If you have a good credit rating, then perhaps its time to consolidate it or to just get rid of credit cards. Now, I say that Lynn and I know people go, oh, but my God, its going affect my credit rating.

NEARY: I was just about to say, havent we been lectured time and time again over the idea that its going to hurt your credit rating if you close down a credit card?

HALL: It will hurt your credit rating if the percentage of outstanding debt that you have increases substantially as you close down a credit card. However, if youre not going to need to borrow money over the next three to six months, then you have time to rebuild your credit by closing down all those store cards, primarily, that sit in peoples drawers. Not that most people use them, but they are a temptation when youre feeling weak.

NEARY: Yeah. What about investments and retirement plans? Is it a good idea to take a look and see how your money is growing in those at this point?

HALL: Absolutely. I dont believe in the sleeping beauty method of...

(Soundbite of laughter)

HALL: ...of investment where you close your eyes and then you wake up rich and happy.

(Soundbite of laughter)

HALL: It doesnt work that way.

NEARY: It doesnt?

HALL: No.

(Soundbite of laughter)

HALL: We should all move forward and in a very organized fashion. We should always have a goal. How much money do you want to have to retire on, Lynn? Have you sat down and really thought about that?

NEARY: Well, I know though how much I want, Alvin...

(Soundbite of laughter)

NEARY: But the difference between want and will have is big, I think.

HALL: Exactly. But at least if you know what you want, you can work toward it. And you never can tell whats going to happen in the route toward getting there. Almost everybody needs a little luck. So, over the next couple of years, as you move toward your retirement or whatever, you may get a run up in the stock market or some other investment that will deliver to you an amount of money thats close to what you want. So, know what you are working toward and see if your current assets and the way youve deployed them are helping you to reach that goal.

NEARY: Well, you know, I think people are very nervous about doing anything with their investments. You know, they decide on one thing and then again...

HALL: True.

NEARY: ...its the sleeping beauty method, I guess, but theyre afraid - they dont know how to make it change. Theyre worried about making the wrong kind of change. How can you advise people on that?

HALL: Sit down with a financial professional, either one of the large mutual fund houses that offer their service and talk to them about your goal. How can you restructure the mix of your assets so that you can get a possible return?

Now, not everybody is willing to take high risk. You can take greater risk when you're younger. As you're moving toward retirement, you need to be much more concerned about securing your assets. So look at your age, your time horizon, and your risk tolerance over the period of time that you're going to be invested in the market and decide how much money you would like to have at the end of it and change the mix so you give yourself a better chance of getting toward that. Also, I recommend that people read books, either using their Kindle or some other device..

(Soundbite of laughter)

HALL: ...but read about how to make an investment. There are lots of good books out there - simple, straightforward - that are not trying to sell you anything.

NEARY: Now, you also recommend getting rid of clutter of the physical variety to make some extra cash.

HALL: Yes.

NEARY: You're talking about a garage sale.

HALL: I say turn those dust collectors into interest collectors. We can all go through our houses and we can look and see: What are the things that we have there that have just been sitting on the shelf? Why not have a yard sale or do something fun for the day to see if you can turn some of that stuff into cash that you can then use to pay down your debt or to start something else or to plan for your summer vacation?

The reason I like to do all of this planning this time of year, Lynn, it's because look at what's facing us. The tax year is coming up, right? We have to pay our taxes. If you get yourself in order, tax preparation will be easier, and then summer vacation. If you can plan well for that, then you will have set yourself on a course to be able to take that wonderful vacation without racking up more interest-bearing debt.

NEARY: Alvin Hall is TELL ME MORE's regular financial contributor. He joined us from our bureau in New York. Bon voyage, Alvin.

HALL: See you in Saint-Tropez, Lynn.

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