The Hidden Fortune You Just Tossed In the Trash

We've all got that "to do" list that never seems to get done. It starts off as a record of Very Important Things that don't seem particularly urgent. Eventually, we'll "deal with old 401(k) paperwork" and "look into getting life insurance"... after we replace that cracked windshield and pick up the dog's heartworm medication.

This important document then embarks on a predictable migration pattern from the top of the pile of papers on the desk to the bottom of the pile where it is eventually rediscovered (while we're straightening up for last-minute guests) and ultimately moved to the safety of our laptop bag for its slow crumpling descent to the bottom of our laptop bag, where weeks later it experiences a rebirth as a handy piece of scrap paper reminding us to pick up milk and toilet paper on our way home from work.

It's not like we're avoiding our chores. Fixed windshield? Check. Refilled heartworm meds? Check. TP and milk? Check. Blowing off thousands of dollars in savings? Check.

That crumpled list of non-urgent money "to do's" at the bottom of the trash can? Oopsy, you just tossed a gold-plated piece of scrap paper in a Hefty Bag.

The cost of avoiding your money "to do's"
Let's run the numbers on a few common scenarios and hopefully inspire you to finally tackle those financial housekeeping issues you've been avoiding.

Filling out that 401(k) rollover paperwork. You had a lot on your mind when you left your old job. Dealing with the money you had in the company 401(k) didn't seem urgent. Perhaps your employer allowed you to keep the money in the plan. Some do. But most require departing employees to withdraw the money within a certain period of time after departure. If they don't hear from you, they'll cut you a check for the balance.

Don't sit on that cash for too long or you'll be sorry. You have 60 days from when you get that check to roll it over into an IRA and avoid the wrath of the IRS. Miss the deadline, and you can say sayonara to 35% or more of your 401(k) balance to taxes (the early withdrawal penalty plus ordinary income tax). That's money you'll never see again because you dillydallied.

Paying your credit card on autopilot. Sure, you'll stay on your lender's good side if you pay the minimum amount due as indicated on your monthly statement. But every day you avoid looking for ways to pay it off ASAP you're losing money. It'll take you 10 years and cost you an additional $10,000 in interest alone on a $10,000 credit balance if you pay only the minimum amount required.

Keeping cash at your current bank. Granted, switching banks can be a pain. But if you're earning the zero-point-something interest on your savings, you're doing yourself and your money a disservice. The average money market or savings account interest rate is 0.81%, according to Bankrate.com. Got your money at Citigroup (NYSE: C  ) ? You're earning half that (0.4%). Bank of America (NYSE: BAC  ) ? A whopping 0.1%.

You don't even have to entirely switch banks to nab a deal. Just move your emergency fund or your mid-term savings to someplace with a better deal. Set the timer and spend 20 minutes shopping for a better parking spot for your cash. Here's a list of recent yields at banks, credit unions and brokerages, all of which are insured by the Federal Deposit Insurance Corp. or other agencies.

Institution

Recent Advertised Savings Rate (as of March 23)

American Express (NYSE: AXP  )

1.30%

Ally Bank

1.29%

SLM Corp. (NYSE: SLM  )

1.25%

ING Direct (NYSE: ING  )

1.10%

HSBC Advance

1.10%

There's plenty more money to be had. Before you clean out the garage, ditch the useless insurance coverage you bought eons ago -- coverage for things like credit card insurance and life insurance for a child. Take a break from your gardening to grow your paycheck: If you always get a tax refund, fill out a new Form W-4 to adjust your withholding and stop giving Uncle Sam a free loan.

Still not inspired? No wonder
Even when we know there's a lot of money on the line, so many important "to do" lists become scrap paper because some of the items seem insurmountable. If you're not exactly sure how to get some tasks done, don't leave them hanging -- get some help.

Good help is so hard to find these days. As my colleague Robert Brokamp points out in "Want My Advice? You Can't Afford Me!," unless you're flush (defined by the financial services industry as having $250,000 or more of investible assets), your call will go directly to voice mail or to the junior level staffer.

And if you can afford to take your "to do" list to a Brooks Brothers suit at a big-name firm, you might not want to. Most of those financial pros are paid by commission (can you say "conflict"?) and/or get a cut of your net worth which shows up as the innocuously named "management fee." So much for the money you "saved" crossing each money chore off your list.

Need help? Get the right kind
Thankfully, you do have options outside of the high-priced money management system. Help for the rest of us comes in the form of fee-only financial advisors -- the only kind we like at The Motley Fool. Because they are paid by the hour or by the project, it's an affordable way to get help crossing off a specific biggie on your "to do" list or even crafting a full-blown financial plan.

We recently hosted a live chat with planners from the Garrett Planning Network, an international network of fee-only planners who offer pay-as-you-go, as-needed financial planning advice without the taint of commissions, fees, income or account minimums, or long-term contract requirements. (I was so thrilled to discover the Garrett Network 10 years ago that I sent my parents to one of its planners for advice.)

Check out the Q&As that the advisors fielded during our live event and see if any of your questions were answered. They covered everything from Roth IRA conversions to ETF investments to retirement withdrawal rates.

Added bonus: Right now most of the network's planners are offering a limited-time 10% discount to Fool readers. (Visit the Locate an Advisor map, click on your state, and look for the Motley Fool logo to identify participating advisors.)

What are you waiting for? It's time to retrieve that valuable "to do" list before trash pickup day. There's plenty more money to be if you prioritize your "to do" list right.

Dayana Yochim no longer uses "to do" lists as bookmarks, coasters, kindling, or scrap paper. She owns none of the companies mentioned in this article. If you still want to kill time before tackling your "to do" list, here's a link to the Fool's disclosure policy.


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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On March 28, 2010, at 10:00 AM, Samadd wrote:

    Do pay your credit card by autopilot. Just do it by direct debit and PAY IT ALL off. If you are short of cash there are much cheaper places for credit than credit cards.

    Do consider spending time every year locating all bills, credit card receipts etc covering one month and analysing them to see where all the money goes. This will focus your efforts on where you really can save some money.

  • Report this Comment On March 28, 2010, at 9:47 PM, seer1949 wrote:

    The criminals in the banks are now doubly screwing us over. How do we stop this? They are reducing everyone's credit card limits so that you are now stuck with an open credit line which makes your originally less than 35% of usage now 50% or more of usage. That in turn negatively effects our FICO scores, which in turn effects our ability to get good credit AND gives the same GD banks that originally reduced the line (after giving it to us without our even having to ask) the rationale to cancel the cards or, worse yet, increase the now variable rate to its maximum!!!!! This is worse than the mafia. At least you knew what the vig was. These b.....ds make it up as they go along and then claim its in response to the credit bill (after saying it is required by the credit bill). Who do we report this criminality to? Thiink of it!!! They reduce your credit so they can charge you more and so can everyone else!!! Business ethics anyone. Oh and by the way, they take your jobs away as well, and your houses, and WE BAILED THEM OUT!!!!

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