Gails Blog

One of the biggest issues for people who are having financial difficulties is the fact that everything about their money is disorganized. They pay bills late, don’t pay them at all, or pay the same bill twice. Yup, I’ve seen it with m’own eyes, people. They transfer money back and forth between numerous accounts, often incurring overdraft fees because they miss by minutes. They take $100 out of the bank and 20 minutes later they’re back for another $20. Whazzup with that?

Most of us are disorganized in some way. I can never seem to find my keys. No matter how many “spots” I have in my purse, in my fanny pack, on the hook, I seem to spend more time than I should looking for my keys. Some people can’t keep their shelves organized. Other people have a junk drawer where they dump stuff until they “have the time” to get it put away. I’ve seen the Junk Drawer principal even applied to a whole room in a house. Sheesh!

Disorganization is one of life’s great stressors. Visual clutter makes us feel uncomfortable. Mental clutter keeps us awake at night. Taking the time to get your stuff organized, including your finances, will pay in time saved, reduced stress and a clearer path to being financially balanced.

People want to be organized and they’re constantly looking for an easy way to put things in order and keep them that way. When I did my speaking engagements last year, we gave away an Office in a Box at each session. People cried when they won the Office in a Box. It was relief, I think.

Build your own Office in a Box. You probably have lots of this stuff just sitting in a drawer somewhere. All you need are:

 

• Box of file folders (approx 30)
• Box of hanging folders + tabs (approx 25)
• Box to hang folders in
• Lables (1 box)
• Pens coloured (1 pack)
• Pencils plain (1 box)
• Eraser
• Small stapler
• Staple remover
• Scissors
• Scotch tape
• Paperclips
• IN box tray x 2
• Post-it notes
• Calculator
• Envelopes (letter sized)
• Stamps
• Accounting book — ruled

There’s no magic in getting organized. It takes time. It takes focus. And it requires that you have a process that you can follow. But it isn’t hard. Any dope can do it. 

When it comes to getting organized, everything needs a place. Gather all your paperwork and create a file folder for each of your accounts, forms of credit, home, insurance, estate, and taxes. You can use a filing cabinet or a box. The folders have to be able to stand up on their own, or you can use hanging folders to keep them straight.

Welcome to 21st Century banking.
 If you don’t already have it, set up telephone or internet banking. If you don’t have a “free” or almost free transaction account, you can reduce fees by setting up a buffer
 If you can afford it, transfer $1,000 float to your chequing account (pretend it isn’t there) and use that to minimize your banking costs. If you’re paying more than $20 a month (that’s high) for your banking, you’re a sucker!

Save automatically.
 Create an auto-debit from your chequing account to a savings account that will not be touched. Most people won’t put money into a savings account on a regular basis, opting to wait for a tax-refund or bonus before setting aside some money for the future. Establish an automatic savings deposit every month and your nestegg will accumulate faster than you think.

Create a Monthly Bill Summary. List your bills in the date order they need to be paid to prevent you from missing a bill. If you have bills that are paid automatically from your account, write an “A” beside these bills and remember to deduct them from your Spending Journal at bill payment time each month.

Set-up your in-baskets. 
Create an in-basket with two Unpaid Bills folders labeled “1-15″ and “16-31″ 
 Don’t let the mail pile up. As soon as you bring in the mail, look at the due date on the bill and put it in the appropriate folder. Recycle all the marketing crap in the envelope. 
Create a second in-basket with 3 folders labeled “bank statements”, “bills paid” and “tax receipts”.

 

Weekly


Make a date with your money. 
On the 12th and 28th of each month to pay bills, set aside the time in your schedule - you’ll need about 30 minutes, depending on your bills — to pay your bills.

Always pay your bills in one place that you’ve equipped with your bill paying system, spending journal, envelopes, stamps, pens, pencils, a calculator, tape, a stapler and return address labels and recycling bin for all that marketing stuff you’re going to dump.

When you pay a bill, write the cheque or transaction number, amount paid, and the date you paid it on the bill. Put the paid bill in your “bill’s paid” file. Deduct the amount you’ve spent from your Spending Journal. If a bill has not been paid in full (tax bills are paid over several months, for example) put it back in your Bills Folder so you don’t forget it.

 

Monthly

Reconcile you bank statements. When you bank statements come in, put them in your in-box folder. Make a date when all your statements are in (it’ll depend on when you receive them) to:

 

• review your statements to make sure there are no mistakes
• reconcile your Spending Register; clearly mark the cheques that have gone through your account and highlight the ones in your Spending Register that haven’t yet cleared the bank. A cheque that is taking a long time clearing the bank can lull you into thinking you have more money than you do. Go back at least a month to make sure all previous cheques have cleared.
• talk with your partner about anything unusual

 

Quarterly


File. 
Once a quarter, file all your paperwork to keep your system current.

Talk.
 Have a dinner with your partner and talk about the bumps, your goals and how you’re doing.

 

Annually


Re-vamp your budget. 
Review your budget using last years cc statements and bank statements to see what you actually spent. If you spent more on a particular category, make sure you know why, or look for ways to trim.

Clean up.
 Go through your files at the end of each year and throw out bills and receipts no longer needed for auditing/budgeting purposes.

 

• Tax Returns and Backup Documentation: Whether personal or business, the general rule is seven years.
• Insurance policies: Keep everything for as long as the policy is in effect. You can dump the old policy if you get a new one with your renewal each year. Don’t rely on the insurance company to provide copies of your records since any burden of proof will fall to you.
• Warranty Documents: Review your warranty file annually and get rid of documents for defunct appliances, telephones, or anything else that’s gone the way of the recycling bin. And, of course, when the warranty expires, you can chuck the paperwork.
• Home Repair Bills & Contracts: For as long as the warranty is in place, or longer if you want to prove upgrades for insurance or home resale purposes.
• Pay Stubs: Keep your last two year’s worth.
• Bank Statements: Keep a year’s worth in an accessible place so you can re-vamp your budget from accurate figures. File everything else for five years.
• Credit Card Statements: Keep the current year’s on hand for revamping your budget.
• ATM Receipts: Dump them once you’ve reconciled your bank statement at the end of the month.
• Investment Documents: If you have stocks, bonds, or mutual funds, you are buried in prospectuses, privacy notices, address confirmations, along with your regular statements. Keep the statements. Forever.
• Utility Bills: Writing off your utility bills for tax purposes? Keep them in your tax file. Otherwise, keep one year’s worth for comparative purposes. 
• Mortgage Documents: Until you die or the mortgage is paid off, whichever comes first.

BTW, people have been asking about The Budget Binder. There’s an example of how to make your own in the Your Questions section.

Tags: financial filing, get organized

This entry was posted on Thursday, July 24th, 2008 at 10:12 am and is filed under Good ideas, Money Management. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.