When we think of spring cleaning, we may think of organizing the house, garage or car. But officials at the Ohio Department of Commerce want us to think about cleaning up our personal finances.
Robert Rutkowski is the deputy superintendent for the Division of Financial Institutions at the Ohio Department of Commerce. He offers some tips.
Robert Rutkowski: The biggest thing is subscription creep. It's very easy to sign up for subscriptions, but very hard to cancel. It's one click to get in, but then you have to make phone calls during business hours to get out. So having an initial sweep of your streaming services and your gym memberships and everything that you spend money on monthly, looking at that and asking yourself, am I still using this? Because those services that people don't use but still pay for, on average, that's $200 a year that gets basically thrown away.
Mike Frazier: For people who might find it hard to unsubscribe to some services like Amazon Prime or Netflix, do you have any advice on helping them out?
Rutkowski: My wife went through this just the other day and she started by Googling it. And I would think that that's definitely the best way to start but getting an AI to help you: Copilot, ChatGPT, Perplexity, Grok, Gemini, there's so many options now. And talking with them about it. They can show you the hidden tricks to help to get out of the most complicated subscriptions
Frazier: Other spring cleaning advice?
Rutkowski: Old paperwork, it's important to know what to keep and what to throw away. And generally, if your tax situation is pretty simple, then three years — you can keep your tax records for three years. But if you're an investor and you have complicated taxes, then you're looking at seven years. For example, worthless stock losses, to offset the losses for those, you have to keep the records for seven years. And real property three years after the sale of the property — keep those records. And employment taxes — four years. But going through the old paperwork clearing all that out to bring up space for sadly more paperwork, that's a good part of the spring cleaning process.
Frazier: What about people's personal budget, with gas prices high and inflation? How can people manage their budget more efficiently?
Rutkowski: What I've read in my research, the way to deal with this is to take as much out of the willpower part of it as you can, because willpower is a finite resource. And if you're trying to do all of this in your head, then it's going to wear you out really quickly. So think of it like a thermostat for your house. You're not sitting there micromanaging your thermostat all day. It just does it.
So if you can set things up to automate your finances and automate the changes that you're making to give you the benefits, that will take some of the mental stress out of it. For example, automatic bill pay is just the beginning. And there's things that are suitable for automatic bill pay — your electric, what have you, the recurring costs that you are not going to be surprised about. And those things you might not want to automatically pay.
But when you set that up, set up the pay-yourself-first concept as well. So, if you are cutting back streaming services, then identify those and then have your bank or credit union withdraw that money and then put it into a target account, whether it's a savings account or a brokerage account, every single month so it's automated and you can look and you can see the progress that you're making. That takes a lot of that mental overhead out of your life.
Frazier: So that money is automatically taken out and then bit by bit that destination account builds up and builds up. And so when you check your financial records or your bank records, you have perhaps more money there than you expected.
Rutkowski: Exactly. I think the important thing is that in terms of personal finance, psychology is just as important as learning the ins and outs of personal finances. You have to know yourself. "What am I going to do with a budget? Am I going to do what's best with a spreadsheet? Am I gonna do best with an app? Am I doing best by writing it out in the back of a napkin?”
Whatever I'm going to do best and what I'm gonna keep going for, that's what you have to do. You want to get started and stick with it.
