Roll up your sleeves. This is a practical article.
If financial paperwork remains your undoing, here’s a plan that can get you organized, once and for all, in one afternoon. Start with a fresh box of hanging folders, a box of regular file folders, a marking pen, two 9-by-12 inch envelopes, a shoebox-sized container that will become your bill box and all the wayward papers in a big pile.
Twenty minutes: Set up your file drawer. The proper way is to place one regular folder inside each hanging file folder. When you need to pull the file, the hanging folder stays in your drawer as a space saver. Create at least the following categories: bank accounts, car, credit cards, health records, house, income taxes, insurance, investments, loans, major purchases, pension plan and safe deposit box. (Bonus categories: Create a file for people, in which you’ll put all the membership directories and lists you get. You’ll always be able to find the numbers you need. And create a file for directions. Whenever you get directions to a friend’s new house or a client’s office, file them there. Sooner or later, you’ll want to go back.)
Two minutes: Create a folder called “To Be Copied” and leave it out. As you sort through papers and put them in the appropriate folders, put anything that needs to go to the copy shop in that folder. That includes all of the documents (birth and marriage certificate, securities, etc.) that you’ll put in your safe deposit box.
Five minutes: Set up your bill box. Add envelopes, pens, postage stamps, a calculator, address labels, paper clips and a small calendar. Put mortgage and car loan payment books in the box. As you receive bills that need to be paid, just add them to the box. At bill paying time, that box and any flat surface are all you need to stay on top of your requirements. Put investment and deposit tickets in the box, too, and it will be that much easier to pay yourself first.
Fifteen minutes: Prepare your tax records. Label one large envelope “Taxes 2009.” Put it in the income tax folder and as deductible receipts, tax reports and the like come to you throughout the year, add them to that envelope. Label the second envelope “Taxes 2008.” On the front of it write the forms and reports you are waiting for – such as interest statements from your mortgage company and your annual W-2 wage report from your employer. As you receive these items, check them off on the front and stick them in the envelope. When the envelope is full and the front is fully checked, you are ready to take the envelope to your accountant.
Two hours, more or less: Do all your filing. It’s unavoidable, but easier now that you are categorized.
Fifteen minutes: Compile a master list of all bank accounts, including account numbers, name, address and phone number of the bank, etc. File under “Bank Accounts.”
Fifteen minutes: Do the same for your credit cards. List issuing institutions and phone numbers to call in case of loss or theft. File under “Credit Cards.”
Fifteen minutes: Start a master list of home improvements you’ve paid for. These will eventually be deductible against the profit you take in your home when you sell your last house. File, of course, under “House.”
Forty-five minutes: Go to the copy shop and copy everything in your folder. Take it directly to the bank and open a safe deposit box, if you don’t already have one. Put all the important documents in it, and come home and put the copies in your “Safe Deposit Box” folder, along with the box literature and key.
Ten minutes: Take out the trash, which can include canceled checks for everyday items you’ll never use again (such as food, dry cleaning and cash), monthly bank statements, once they’ve been replaced with subsequent statements, expired warranties, old insurance policies and copies of nondeductible, undisputed bills you’ve already paid.
The rest of the day. Pat yourself on the back, you’re organized.