Liz Weston: 5 ways to simplify and reduce your money clutter

Professional organizers might define household clutter as a pile of unmade decisions. Money clutter is much the same.

Those credit cards you no longer use but haven’t closed? That’s money clutter. So is the retirement account you left behind three jobs ago and the financial paperwork you keep but no longer need. Money clutter also can include broken systems that should be mended, such as a bill payment routine that leads to overdrafts or late fees.

You can simplify your financial life by dealing with those long-delayed decisions now and streamlining how you manage your money going forward. Here are five tasks to consider.

1. CONSOLIDATE ACCOUNTS

The more financial accounts you have to monitor, the more stress you’re likely to feel, says Chicago financial planner Sheila Padden, president of the Alliance of Comprehensive Planners. It’s too easy to lose track of an account, miss a due date or fail to notice a fraudulent transaction.

“Like any machinery, if there’s a lot of moving parts, then it’s more likely to break down,” Padden says.

One relatively easy way to consolidate is to combine workplace retirement accounts. You may be able to transfer old 401(k) accounts to your new employer’s plan, for example, or roll them into a single individual retirement account, or IRA.

Closing unused credit cards is another task worth considering, although shuttering accounts may ding your credit scores. Minimize potential damage by hanging on to your oldest and highest-limit cards. If you have multiple cards with the same issuer, ask whether the credit limit on a card you want to close can be reallocated to one you want to keep. And don’t close cards if you’re about to apply for a major loan such as a mortgage or an auto loan.

2. GET...