Decluttering can be a sensitive subject. But mostly, decluttering is a positive game changer – financially and in real life.
The reason decluttering in “real life” can be sensitive may be obvious to married couples who, together, have gone through their garage lately (grown men can cry over getting rid of old ski gear from the 1990s – story from a friend).
Barriers to decluttering include:
- emotional attachment to “stuff”
- memories of times long ago when the stuff was useful
- the hassle of carting all the old stuff off to a reclamation center (AKA the dump) which is time-consuming.
These factors prevent decluttering from happening.
On the other hand, one of the biggest positives of decluttering an attic, house, or garage is that when the time comes for the inevitable move to a new home (think both upsizing and downsizing) or when buying a 2nd home or vacation getaway, there is far less stuff to move. Less boxes to pack; less boxes to pay movers to pack, move and unpack. The list of positives is long.
Compare these points to financial decluttering. No matter the age of a person, financial matters pile up over months and years. Rare (but admirable) is the person who has been at one company his or her entire working life with one 401k account. For those who have changed jobs or careers one or more times there can be multiple retirement accounts (401k, 403b, 457, TSP, annuities, etc.) from past employers. Anyone with either a basic or complex financial life can have:
- multiple bank accounts from efforts to “diversify” or various promotional savings rate offers
- old IRAs from “way back when”, not contributed to in years
- investments tucked away long ago in insurance, annuities
- investments made in friends’ start-up companies
- old venture capital investments
- ownership in current, successful business ventures
- company-funded whole life insurance policies
- old and new stock options, grants and RSUs (restricted stock units)
- multiple brokerage accounts
- I-bonds (inflation-linked US savings bonds)
And finally….
- the dreaded inherited US Savings bonds.
Decluttering – including getting rid of, cashing in, organizing, or consolidating – a number of accounts including several or more of the above listed items can be life-changing – and even a form of pain reduction. An additional positive is increased awareness of tax implications of various investments which can lead to new or future tax and estate planning. Simply having less accounts to monitor is classic financial decluttering.
Think of the process as attaining a higher level of financial sophistication while gaining time and peace of mind.
This material has been prepared for informational purposes only and is not intended to provide, and should not be relied upon for, tax, legal or accounting advice.