When we had our first child, it seems like we were prepared for the apocalypse whenever we stepped out the door. Below is a visualization taken from Pinterest, while we actually had this $60 SkipHop diaper bag filled to the brim.

Compare that with what I grabbed as my “diaper bag” for our youngest baby this morning:

If I am going to be out for no more than a few hours, this is all I really need.

– 99 cent reusable grocery bag
– butt everything wipes
– two diapers
– poop bags (also used for dogs)
– food/drink (if breast milk unavailable)

If you aren’t experienced, then you want to be prepared for every possible situation. Over time, you realize what you really need and leave everything else at home. Instead of more stuff, you are instead mentally prepared with the various improvisations you can perform in unexpected situations. (I also keep a bag in the car with an extra change of clothes for everyone.)

A similar example is packing luggage. What used to just be for “backpackers” is now for everyone. Websites about packing light abound. My first few trips, I packed myself a huge, cheap Wal-Mart suitcase at maximum-weight along with another maximum-size carry-on. Something like this:

After many flights (and an experience with delayed luggage), like many others I found myself with just a carry-on travel backpack for a month-long trip (or even longer).

I feel like this trend should apply to investing as well, but it seems like the ultra-wealthy tend to have a more complex mix of investments. Perhaps the very wealthy like to spread their money across various asset classes like real estate, private equity, and hedge funds because it reduces the chance of catastrophic loss. For example, sometimes I want to buy a rental property as it seems it would offer additional diversification to a stock and bond portfolio, but I really don’t want to deal with bad tenants or mediocre property managers.

I do like the idea of simply transferring over some of my bond interest payments and stock dividends to my checking account every month in retirement. However, a part of me is uncomfortable having so much of my net worth in investments where the only tangible evidence is paper and ink via monthly statements.

I suppose it’s not a good sign that in the middle of reading a #1 NYT bestselling book on organizing your stuff… you lose the book in all your stuff. In case you haven’t heard of it yet, The Life-Changing Magic of Tidying Up: The Japanese Art of Decluttering and Organizing by Marie Kondo. In my defense, it is a rather small book. I hope I don’t have to buy another one.

Instead of spending more time looking for it, I decided to make a list of all my financial items that could use some decluttering. As someone who loves to try out new financial products, I tend to accumulate accounts in during bouts of enthusiasm. Part of the “Kondo-ing” process is going through things by categories (i.e. clothing) and not moving onto another category until you’re done. Most importantly, you should only keep things that “bring you joy”. Hmm… how about “bring me profit”?

Bank accounts

• Close out inactive bank accounts which are unlikely to offer good interest rates or other benefits in the future.
• Re-examine all automated transfers (direct deposit, 401k contributions, 529 contributions, auto billpay, etc).

Investment accounts

• Close out idle brokerage accounts.
• Merge all speculative activity into one brokerage account.
• Consider liquidating all positions smaller than a certain size.
• Merge smaller 529 plan accounts and/or change beneficiaries.
• Check up on LendingClub and Prosper P2P lending accounts. These should be nearly wound down.
• Check up on Patch of Land crowdfunded hard money lending account.

Credit card accounts

• Close out accounts which will not justify the annual fee based on my planned activities for the next year. Decide ahead of time which ones to keep if they offer to waive the annual fee for another year.
• Mark on calendar any special perks or benefits which still need to be used.

Gift cards

• Redeem Visa/Mastercard/AmEx prepaid cards into Amazon gift card credit.
• Think of ways to use up retail gift cards; add to calendar to be finished next two weeks.
• Decide what to do with unused retail gift card. Sell at loss? Wait until year-end 2015 and use for gifts?

Not-going-to-do list

• I still haven’t gone paperless and have no immediate plans to do so, but I already have a pretty good system for organizing my paper statements.
• The same system already has me examining all expenses on a monthly basis.
• I’m happy with my core investment portfolio. Relatively clean and simple.
• I don’t have any old 401k or IRA balances floating around. We have an active 401(k) at Schwab PCRA, Solo 401(k) at Fidelity, and IRAs at Vanguard.
• I’m happy with our core monthly cashflow setup. We combine finances and have one joint checking account where we deposit a set amount each month and pay all bills from that account. We make additional transfers if we have larger one-time expenses like a new roof or something.

I’ll try to update as I work through this list.

Dan Kadlec of Time magazine offers up 9 Ways to Simplify Your Finances. I always swing back and forth, wanting a nice simple financial life one day, and the next day itching to try out all the cool new financial tools out there. I tend to split up my accounts into “core” and “explore”. The “core” accounts hold the vast majority of my money, while the “explore” accounts result from sign-up promotions and/or pure curiosity. Anyways, let’s see how I did one the 9 ways listed:

• Get down to one mutual fund. The article recommends target-date funds, which I think are fine if you go Vanguard, Fidelity Index, or maybe T. Rowe Price. Right now my portfolio holds 10 mutual funds/ETFs and some individual TIPS. If it weren’t for different 401k providers, I could get down to about six.

  I really don’t feel these funds are very hard to manage though as I have my target asset allocation already determined and I simply rebalance with new funds and once a year otherwise.

• Keep two credit cards. Fail. I go through a lot of credit cards. Right now I’m meeting the spending requirements on the Barclays Arrival Mastercard and the Chase Ink Plus. It’s a profitable hobby, I tell myself.
• Pay bills online. Stamps cost way too much to do it any other way. I charge what I can on credit cards, and the rest is done with online banking.
• Choose one financial institution. Does this mean bank or brokerage? Probably both? Well, I have one local regional bank account and an Ally checking/savings combo as my core bank accounts. Vanguard and Fidelity are my core brokerage accounts. I guess another fail, but I am unwilling to give up features here for simplicity.
• Automate everything. Direct deposit for both of us, check. 401ks are always automatic, so check. Automated IRA funding? No, I just do a lump sum early in the year. I’ve tried, but I don’t like to automate credit card bills.
• Get overdraft protection. Ally Bank checking account has a feature that I can automatically use my savings account for overdrafts with no fee. I don’t even know if my local bank account has overdraft protection or not, as I’ve never had to use it.
• Create an emergency fund. Check. I haven’t done any rate-chasing recently, as there has been very little to chase. But I know I would if some bank offered a crazy-high APY.
• Pay yourself first. I don’t do this explicitly, although I do make sure that both of our 401ks and IRAs will be maxed out early on in the year.
• Get organized through new technologies. I do use the recommended Mint.com (free) to aggregate my spending transactions only. I also use one of their recommended password managers, 1Password ($40+). I like both. I hadn’t heard of the other password keeper mentioned – Dashlane – but it does look polished and the basic version is free.

I like playing around with finances, so I’m okay with my level of complexity for the most part. Things are set up so that most of the important stuff in a few limited places in case something happens to me, but maybe 5% of our net worth might be spread out in some experimental accounts.