Assessing the Progress toward Financial Simplification

Back in April, after reviewing our financial structure, I came to the conclusion that our system was way to complex due to the large number of accounts we own, though I managed to make the system work quite smoothly for us.

Now nearly five months have passed since I decided to simplify our finance to make it more efficient. Did I make any progress? The answer is, disappointingly, not quite. Though I have twisted things a little bit here and there, I guess I actually increased the number of accounts under our names instead of shrinking it. Here’s where we stand now.

Online bank accounts: Then 5, now 4

This is probably the only area that I actually worked to meet my goal: I closed two bank accounts (Virtual Bank and Emigrant Direct) that I don’t think I will ever use again. However, a new bank account (FNBO Direct) was opened in May.

Brokerage accounts: Then 4, now 5

Looks like I am moving backward here. I did terminate my relationship with ShareBuilder, but I also opened two new brokerage accounts at Zecco and E-Trade since May. No progress on this front :(

Credit card accounts: Then 20, now 19

OK, so the total number of credit cards did come down a little bit. However, 19 is still a large number that could use some reductions.

What needs to be done

Though very limited progress has been made so far, I still want to have a smaller system to make managing all the accounts easier to do. Right now, the easiest target is the online bank accounts, which can be reduced to 3. At the end of this month, FNBO Direct will end its 6.0% APY promotion and I may consider close the account depending on the rate. For the brokerage accounts, since each account has its own purpose, I am not so sure which one should be eliminated. The only possible choice is Firstrade, which doesn’t really have special features except that it serves as an alternative to Scottrade for dividend paying stocks/ETFs investments. Since I don’t use that account very often, it doesn’t hurt too much to pay $6.95 per trade. For credit cards, I already have a couple accounts in my mind that I can get ride of after the 0% balance transfer is over in November. For example, I don’t think I will ever use Chase Sony card, Flexible card, and Discover Miles card.

Even after the planed reduction, the total number of accounts we have won’t be significantly lower. From what happened in the past five months, I kind of keep my expectation low. It’s quite easy to get a new account when it has some uses even temporarily. Closing it, however, doesn’t seem to be always urgent. Thus the accumulation of accounts. Now I only hope it won’t get blew up again.

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6 Responses to “Assessing the Progress toward Financial Simplification”

  1. Sa Ra |  Sep 11, 2007 at 12:23 pm

    Why don’t you open a trading account with Wells Fargo? They have 100 free trades per year if you have $25,000 total in cash/cd/equity/mutual fund etc.

  2. Sun |  Sep 11, 2007 at 8:44 pm

    I am aware of the Wells Fargo program (Bank of America has a similar one, but not as good with a higher minimum requirement). The only reason that I don’t want to use it the requirement of $25,000 minimum balance of the account. Though the balance of my investment accounts is larger than $25K, I don’t want to be forced to have to keep the minimum in order to get the free trade. The same for savings accounts that require minimum balance to avoid fees. I generally try to avoid this type of accounts unless there’s no other alternatives or the benefits are significant. I usually make about 10 trades per year so it’s fine even if I have to pay a little fee.

  3. John |  Sep 12, 2007 at 12:08 am

    Sun,
    The good point of the Wells Fargo PMA account compared to the Bank of America is that the $25,000 requirement is the sum of all the accounts with Wells Fargo. So the stocks in your account are also valued and as long as it satisfies the criteria you are good. On a negative note they do not have good rates for Options trading :-(

  4. Tyler |  Sep 12, 2007 at 7:40 am

    How you keep that crap organized is beyond me. Why the financial hoarding mess? It sounds more a like a psychological problem to me. Get your act together and get yourself down to 1 checking and 1 savings – At most, 3 credit cards, and 2 online savings. I think you’re ok on the brokerage accounts because of the different needs but needing anymore than that is beyond comprehension.