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Rehab Your Finances

Need a money makeover? Take a cue from the construction industry and approach your finances like you would a fixer-upper. The instruction manual is actually quite similar:

Do the prep work. Before any renovation project, there's a certain amount of prep work to be done. Start off by thinking of money as opportunity. The best things in life are indeed free -- like catching the twinkling eye of your significant other across the room at a cocktail party. All other things require cash. Don't avoid the topic of finances. Instead, use money as a means to achieve a dream whether you pine for an early retirement, a summer home, or sending the kids to your alma mater.

With the tarp rolled out and the kids packed off to the babysitter, it's time to don your grubby clothes and get to work.

Spruce up the exterior. A little superficial housekeeping can go a long way to improving your living conditions. Just finished your taxes? What a great time to clean out the files! As a general rule, the items you want to keep forever are your tax returns, real estate records, annual retirement account summaries, final loan statements, and receipts for big, insured items for as long as you own the item. Hold on to bank records and investment statements and paperwork for at least seven years. Update your beneficiary information, especially if you've had a critter or undergone some major life change since you last did it. Then come up with a simple system to keep your accounts straight. Don't forget to tell your beloved where to find all the important papers and how to follow your lovingly crafted filing system.

Do a patch test. Don't you hate it when that perfect shade of celadon on the one-inch by one-inch swatch turns into what your brother-in-law affectionately refers to as "the puke-green room"? Before you go hog wild on rearranging your finances, run through a few scenarios. What would happen if you were forced to live off one salary for six months? How much would it pay off in the future to increase your contribution to your work retirement plan by 3%? Online calculators can help you envision your financial plan in all of its wall-to-wall glory.

Pick one major area to renovate. In home renovation, it's all about increasing the resale value of your abode. In finances it's, well, getting the most bang for your buck -- the "bang" being enjoyment and peace of mind. Whether it's retirement savings, paying down debt, or adding to your child's college savings, concentrate first on one area that'll give your family the biggest payoff. After that, tackle your next project with the same zeal.

Find a trusted pro.When it comes to calling in the reinforcements, it pays to do your homework. You wouldn't hire a bricklayer without calling his references. Same goes for your financial pros. Take a few minutes to read our advice on hiring an advisor, or try out TMF Money Advisor, which includes an online planner and one-on-one help when you need it -- for 30 days free.

As the flowers begin to bloom, start planning your next money renovation.


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