Monday, January 11, 2010

Filing and Organizing Financial Paperwork

Since it is January - a great month for organization - I thought I would write a little bit about the various systems I use, (and have used in the past,) for organizing all that financial... stuff. I'm not saying that what I do is the best, by any means. "Different strokes for different folks," and what works for me may not work for anyone else. However, someone might see an idea here that will spark an idea of their own. So, here you go:

I pay all of my bills through my online banking system. I usually do it during a few minutes of my lunch hour, so, when bills come in the house, they get opened, glanced at, then put in my work bag. This happens in pretty much one movement, no letting them pile up on a counter, they go straight into the bag! Then, the next day I will pop on my computer at lunch time and go to my bank's web site. Many of my bills I have auto-paid. I set them up in January and then they just pay out automatically each month. This works great for bills that are the same amount and due at the same time each month; when I had car loans and credit card debt they were all set up this way. Now it is mostly my mortgage and my utility bills that are on a "budget plan" (so they are the same each month,) that are on auto-pay. I still like to sign into my bank's site though and make sure everything is going out the way it should. It's just habit. However, the beauty of this is that even if I am on vacation or a statement is lost in the mail, the bills get paid on time. It is one of the reasons my credit score is good - because I haven't had a late bill in years.

Some of my other bills are more random, either in when they arrive or the amount due. Trash, water, insurance - they are all quarterly or semiannually. My cell phone comes at the same time, never seems to be quite the same amount each month. I don't have an automatic bill pay for these, instead I create a single payment each time a statement comes in.

After I verify a bill has been paid, then I file the statement in my work bag. I have a folder in it that contains all the statements from the prior month. This is when I glance and make sure that everything seems normal. When I saw my cell phone took too big of a jump up over the course of a month, I spotted it right away, because I have the prior month's statement at my fingertips. So, the new month goes in the Statements folder and the old one goes in a To Be Filed folder.

So that is the basic set up for simple bills and things, here's what I do with the old statements...

Talk about low-tech, I have two cardboard boxes for filing. One is marked with the present year, (I just made my 2010 one a few days ago,) and one is labeled Taxes. I use envelope boxes I get from work - they are sort of like shoe boxes, but wider and and flatter. Any receipt, statement or other piece of paper that has to do with my tax return goes in the Taxes box. Everything else gets thrown in the year box.

I have gone through a couple of different systems for filing statements and receipts. I actually originally started with the shoe box system when I read about it in a magazine years and years ago. Then I got more sophisticated and started keeping files in a locked file cabinet. This worked fairly well, except that while I had no problem adding something new to a file, I wasn't very good at taking things out. Soon my Auto, Credit Card, Insurance and other folders were filled to the brim. For some reason (laziness, perhaps) sorting out the cabinet and removing the previous year's statements just didn't really happen.

Then I became pretty eco-conscious and decided to try to go paper free. I kept one month of statements as I do now, but older statements and receipts were all shredded and recycled. I felt good about the planet, but lousy about my pocketbook when not having a receipt cost me a couple hundred bucks. That's when I went back to my shoe box filing system.

Checking my bank account online on a regular basis means I see instantly if there is any strange charges or odd activity in the account, keeping a paper trail of receipts and statements helps with taxes and returns. It takes up very little space and is super easy to use.

Not all my financial documents are in envelope and shoe boxes, however. Important documents are kept in a fireproof safe in my basement. Documents I update regularly like my budget, are kept in my computer in spreadsheet format. Now in my file cabinet I keep more "timeless" information - taxes, important paperwork on my home and other purchases, generic account information, things like that. It is no longer stuffed to the gills with 3 years of statements from every bill I have ever gotten!

What do you do with all your financial paperwork?

Photo by: SpecialKRB
via flickr

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