Organizing finances is difficult business. Here are 3 easy tips to start putting your financial world in order and prepare for homeownership.

Organization. That word sucks, only because it creates the feeling that you are disorganized. It reminds me of when I was little, my sister alphabetizing our VHS tapes and threating to tell on me when I put the Power Rangers tape after the Teenage Mutant Ninja Turtles tapes. Organization = Bad. However, as I have grown up, learned from my college-age financial mistakes and gotten married, I have established some standards on how to organize and control our finances. After many, many conversations with members that both are very much on top of their finances and some…a little lost, I can tell you that organizing your financial world is powerful and essential.

There are unlimited resources on the internet available for this subject; I want to just give you just 3 of my tips for organizing your finances that will help you prepare for homeownership.

1: Plan and Direct: Tell your money where to go with a zero-based budget.

That darn B-word nobody likes: Budget. Budgeting advice is just like dieting advice: both go through fads and phases, they are the top 1 and 2 new year’s resolutions, there are far too many books devoted to each subject….and both can be summed up with one single word: Balance!

“A budget is simply telling your money where to go instead of wondering where it went.” – John Maxwell.

So, what is a zero-based budget? Zero-based simply means that you have accounted for each dollar. Your income – budgeted items = zero. There are many forms and templates available to help you keep a budget. If you’re an excel nerd (like me), do your budget in excel. If not, print it out and use a pencil. Here is the key: you plan your budget and tell your money where to go the month before you earn it.

Now, it is the end of January. This weekend I will sit down with my wife and we will write our budget for February. We allocate specific dollar amounts to specific categories and since we’ve been doing this consistently for a while we are accurate with what we expect our gas, food and utilities will be each month. If you’ve never done a budget before, then your first 3 months will be trial and error. You’ll allocate too much for one category and too little for another. Just adjust each month and ensure that you are balanced (income – budgeted items = zero). That means that if you need to add $25 for food you need to take $25 from a different category. Zero-Based.

I can promise you two things: One, if you start doing a zero-based budget you will feel like you just gave yourself a raise! You’ll spend less in food, less in general spending and you’ll have more money to put into savings or debt reduction. Secondly, you will feel more confident and secure about your financial future…I like to call this financial freedom!

2.) Reduce Credit Clutter: A professional organizer’s least favorite word is clutter.

Too many open accounts can be too much to manage and may even hurt your credit score. There are many strategies for increasing your credit scores, some work and some do not. Some strategies are overly complicated and some are very simple. If you are serious about organizing your finances and at the same time increase your ability to qualify for a mortgage then you should focus on eliminating the clutter in your financial world.

I did a loan for two members, husband and wife. Between the two of them they had 13 open credit cards accounts of which 9 had balances. This means they had to make 9 different credit card payments each month on top of their mortgage, two auto loans and student loans. Even the best-practices and technology designed to organize your financial world cannot compare with this step: reducing the number of accounts!

Financial advisors and counselors differ in their opinions on credit card debt and credit score strategies. I am not a fan of credit card debt and advise members to keep their credit cards paid off. Sure, keeping small balances and other similar strategies can manipulate your credit score and possibly raise it. But when you apply for a mortgage, your credit score being a 750 instead of a 770 has no effect on your rate but lowering your debt-to-income ratio will increase your borrowing power and make your application much stronger. You will also spend less money in interest and be more organized. 1 stone, 3 pigeons. Or something like that?

3.) Use technology: Mobile banking and Online Banking add value and save time.

There are multiple ways to keep your finances organized using technology. The best resources to choose are the ones that you can interface with both on your smartphone and computer, this way you can always access your account balances and make transfers to/from your savings and checking accounts.

Shameless Verity Plug: I have banked at multiple financial institutions over the years after moving from California to Washington. Of the 3 large banks and 1 credit union my wife and I have had accounts with before me working for Verity, I can say with confidence and honesty that Verity Credit Union’s online banking platform is the best.

I have set up automatic payments to transfer money for a couple of my bills. I share a monthly bill with my dad and I can transfer money to his account at a different institution each month, also on an automatic schedule. Say goodbye to writing checks and mailing them! Using mobile banking and online banking is just one more tool to use to keep yourself and your finances organized.

There are many more ways you can keep your finances organized like filing systems for important documents, online budgeting software or paying to hand over a shoebox full of receipts to an accountant each year. I feel that these 3 tips covered here are just the beginning and perhaps the most important. Getting your financial world in order is a great way to live with one less stress, build a solid financial foundation and put you on the path to financial freedom. Just Sayin’.

Jeremy Sankwich

Hello, I’m Jeremy – I manage the business development efforts for Verity’s mortgage department.  My passion is in helping Verity members down the path to financial freedom and home ownership. I try to go beyond the mortgage loan when helping members as I discuss real estate and financial education.

I have a degree in financial services and financial management from California State University.  I currently live in Auburn, WA with my wife and baby on the way.

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