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I THINK SERIES I savings bonds are a great place to stash money you’ll need to spend in five or six years, and yet I’ve resisted buying. I’ve seen credit cards that offer more cash back than the cards I currently carry, but I haven’t taken the bait. The reason: My goal is to have fewer financial accounts, not more, even if it means fewer dollars in my pocket.
As I discussed in an article earlier this year, I’ve unloaded the jumble of investments in my three Roth accounts—which I plan to bequeath to my kids—and consolidated everything in a single fund, Vanguard Total World Stock Index Fund. That’s had an immediate payoff: Amid this year’s market turmoil, I haven’t bothered checking the performance or even looking at the account values.
Since then, I’ve closed a checking account and a credit card, leaving me with three credit cards and two checking accounts—one personal, one business. I’ll likely ditch one of the three credit cards, leaving me with two. I’ll use one for everyday spending and keep the other as a backup, in case I lose my primary card or it gets hacked.
Next on my to-do list: cutting back the rewards programs that I use. Thanks to decades of business travel, I’m signed up for four frequent-flier programs and three hotel programs, plus I collect Amtrak rewards points. My goal is to use the points I’ve accumulated in most of these accounts and thereafter focus my spending on one hotel and one airline, in part so I don’t have to worry about keeping the other accounts alive by occasionally earning points.
The fact is, the more accounts we have and the more investments we own, the more precious time we have to lavish on them, and I can think of so many better ways to spend my time. Similar to donating or throwing away old possessions, I find it liberating to relinquish these various accounts, and I suspect my executor will also be grateful—though I’m hoping to delay that moment of gratitude for as long as possible.
I usually agree with everything that Jonathan says, but not with the rewards programs, especially the frequent-flier programs. Not that I covet the points – far from it. I see no value in them at all. So, I will always go with the cheapest fare (plus a combination of convenience and “do I have status with the airline this year that justifies the extra $20”). For smaller flights, I will gladly fly coach, and forgo the lounge. It is only for the longer international flights would I consider upgrading – all I need is a lie-flat bed, and every other consideration is secondary. The money saved (often in thousands of dollars) is much more than the benefits of loyalty to a specific airline. Google Flights is my only friend in these matters.
I’m so with you on this, Jonathan. When my husband died quite suddenly two years ago, I knew where all our assets were stashed, but I counted 27 different “buckets”: credit cards, IRA’s, checking accounts, investment accounts, etc. I spent a lot of time consolidating to make it easier for myself and, as you mention, for my eventual heirs to distribute. Like my husband did for me, I’ve created an updated “cheat sheet” for them, with a separate list of my passwords – this last on the advice of a book titled something like “What to do in case you get hit by a bus”.
I agree with the principle of simplification but have taken a different tactical approach than those discussed. First, my wife and I hired a financial advisor. Paying a trusted professional who specializes in retirement planning to not only provide holistic planning advice and manage investments seemed like a good way for us to accomplish many things including spending more time on
travel and less on financial planning and management. Which brings me to my second point of difference-I have several travel cards which I use for various airlines and hotels which increase flexibility when making reservations and continue to provide rewards-that said, I don’t spend much time playing around trying to maximize points but I do enjoy free hotel stays. And third, I buy I-bonds, in part because bonds are key pillar of our retirement plan. As for my executor, they can contact my financial advisor-that’s simple enough for me.
I plan to consolidate our retirement accounts when we retire (we have IRAs from our previous jobs with Schwab and 401Ks from our current jobs with Fidelity), but I do have a carefully curated set of credit cards because I play the points and miles game for travel, which has become something of a hobby for me. I agree it takes some time, but I think it’s fun. Our credit cards are always paid off in full and I make sure that we recoup any annual fees by using the card benefits, and we’ve gotten some great travel values that I’m not sure I could have talked myself into paying cash for (business/first class airfare for long trips, upgraded hotel rooms, lounge access at airports, etc.).
As we get older and travel less, I’m sure I’ll want to simplify this, but right now, it’s fun. According to the Points Guy app, I have over $40,000 in value across my travel accounts, but I’m enthusiastically spending it down, as the points tend to devalue.
If you haven’t updated your estate plans recently, you might want to see your attorney to add language giving your executor or survivor the rights to your digital assets. I have about 20,000 photos on iCloud Family backup as well as an online only account with the US Treasury Direct.
I suspect the right to access digital tax records and other digital artifacts will become more valuable, and the new digital asset clause to your will/trust/etc. will be very valuable.
Great suggestion, Bob. I’ll soon be updating my will and this hadn’t occurred to me. Thanks.
I agree. We have only had two credit cards forever.
In January I began consolidating all accounts to one Fidelity account. Moved two individual stock accounts, 401k and IRAs and consolidated IRAs Also moved two deferred annuities and brokerage account. Linked my bank accounts as well. Now moving money around is easy.
Their website also allows me to track total net worth. I should have made the move years ago.
Is one of your two credit cards the Fidelity 2% back one too? I like saving the 2% automatically into an investment account.
Our credit cards are geared to travel, but when my son gets a credit card I’ve advised him to get that one. A lifetime of kickbacks is a nice boost.
Between taking care of our own financial life, and the execution of our estate, can come a period where someone (a POA) will handle your financial affairs. Keeping it simple and organized makes that process much easier on your POA. Having helped, or led, the execution of 5 estates, I firmly believe that a simple, well documented, and well-communicated estate, is a gift you give to your heirs.
Simplification is a noble goal. I just found out the value of having at least 2 credit cards…our main one was just compromised!
Yes, always! We were traveling on our own out of the country and, instead of authorizing charges in the foreign country (and different time zone), as I had specifically requested, our main credit card company had locked our account and it couldn’t be unlocked for something like 24 hours. Without the backup card, we would have been sleeping on the street!
Thanks for the reminder to keep things simple. I agree that chasing a few bucks often isn’t worth the added complication in life. My wife was executor of someone who hadn’t and it took days to go through all the junk trying to find all the financial documents. It’s really a stressful, unpleasant chore and who knows if she really found everything. And of course cleaning out the house was a serious chore as well. I’m sure your executor will be thankful (although hopefully not anytime soon).
It seems that quite often in life, it boils down to a trade off between money and time.