Financial Clutter ?

when I am in one of "those" moods , I start going around the house and look for stuff to throw away ( ESPECIALLY the bookshelf behind my parents bed ). I get frustrated by the amount of stuff we have in our house... most things which have not been used for long periods of time and stuff which i will never use in my lifetime.... CLUTTER.

In Six Sigma we always talk about the concept that the water level hides 80% of the glacier beneath itself... and thats where the opportunity for improvement lies.
In other words-- when the water level starts to come down--- The SHIT is visible :)

The same simple concept is also applicable in our everyday lives-- in our homes and in our finances.

• I mean i think i will have at least 10 empty diaries at home--- and i think it can last me for the next 3 - 4 years if i use them professionaly
• I have loads of books that i have bought but am still reading --- at least 3 at a time
• I have so many clothes--- that buying new clothes has become taboo for me for the next year ( the sale came and went -- and I did not buy)

So how does something like this translate into finances?

• The number of Bank accounts we may have-- some of them dormant ( eating away whatever money we may have there)-- but all adding upto more money than is required for your emergency fund
• The Number of credit cards we may have--- yes, they come free nowdays-- no annual fee-- But imagine the no of statements we get every month-- and to track the payment date is crazy  ( I finally took my dad's advice and use only two nowadays--- HDFC and SBI)
• The additional cheque books that i ordered from my bank -- I mean the no of times i use a cheque is very rare ( only to pay the club and the electricity bill-- else everything is online nowdays!)
• The multiple MF statements one gets ( Finally my financial advisor opened up his own website and i can see everything there in one place)
• I get at least 4 telephone bills everymonth-- 2 mobiles, 1 LL, 1 data card!

You can see from the above statements how much clutter one can have in ones life-- and it starts to have a domino effect impacting your financials in a big way.-- a few examples are given below..

• You have more money than required in cash -- thus lowering your earning potential
• You miss your credit card payments--- creating late fee issues
• You miss your multiple insurance policy payments--- late / re instatement fees again!
• Your dormant account finally becomes totally dormant-- since all the money has been taken back by the bank to maintain your account
• and more and more and more....

So , it is best to understand how to control such waste ( I am a certified lean practitioner) and use tools like arthamoney.com ( read here) to get all accounts in one place and use strategies of automating your finance payments ( read my earlier post here) to have a more easy life.

 

 

However this is not the only issue with clutter- having clutter in your house and life also forces you to spend more--- because you cannot find the stuff you are looking for--- It is hidden somewhere in all that clutter! The more clutter you have in your house, the more cluttered will be your finances--- there is a perfect correlation!

 

Take the first step-- take control of your clutter... and you will take control of your finances.

 

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