Best Results Organizing

Last week, we talked about how easy it can be to get your filing done, if only each item has a home. When I mentioned that everything fits perfectly in one of five categories:

• Financial
• Legal
• Medical
• Household
• Personal

I received protestations that some items that could not possibly fit into these categories. So, I offer a guarantee…whoever writes in will get a response right here at Paper Doll to show how various and sundry items in need of filing can fit one of these five categories. Yes, even last year’s Christmas budget. Yes, even baptismal certificates. Yes, even instructions on how to change the time on the VCR now that Congress has confused us all with new Daylight Savings Time schedules.

Today, we’ll start with our first category…please return each week, as we’ll be continuing this subject in future posts.

FINANCIAL paperwork is any family’s largest section, because most of the paper we get is in service to little green pieces of paper of which we wish we could keep more. Generally, financial files keep track of money coming IN, money going OUT, and the money that we are GROWING for future needs. The financial paperwork we receive or create usually breaks down into these sub-categories:

OUTGOING MONEY
Monthly and/or regular statements regarding the money you’re sending away—what businesses call ACCOUNTS PAYABLE. When you get a bill, you tear off the stub to mail back with your payment (assuming you’re not doing online bill-pay), and are left with the larger, non-stub portion from:

• Monthly or periodic household/family bills (e.g., rent/mortgage, utilities, insurance, etc.)
• Credit cards statements
• Loans (e.g., home equity, auto, college, personal, etc.)
• Medical bills (for which you have an ongoing payment plan)
• Anything else being paid on a regular or predictable basis (e.g., piano lessons, tuition, personal chef, professional organizer, fitness trainer) for which you wish to keep careful records

Label a hanging folder (or a few, if necessary) for each sub-category, and then label (and alphabetize) your interior folders within each sub-sub-category. It doesn’t matter if you use generic terms (cable, power, water) or company-specific (Comcast, MyCity Power, Valley Water Authority)…just be sure to choose labels that reflect how you think. If your system is complicated, you’ll find excuses not to use it. Stay simple.

For credit cards, if you have more than one card from any one issuing company, you may want to put the last four digits of the card number on the label (Discover -1234, Discover -9876), just to help you file quickly.

INCOMING MONEY
Information regarding incoming revenue comes next—in business, we call these ACCOUNTS RECEIVABLE. (If you have an actual business, keep financial files separate from family/personal files. This will be a subject of a future post.)

For most of us, incoming revenue reflects pay stubs from employment, but this sub-category can also include alimony or child support payments, Social Security income, disability payments, IRA disbursements, personal loan repayments (to you), lottery winnings and stock-dividends (if not part of a dividend reimbursement plan). If you’re regularly getting money from any source, or have gotten a large lump sum for something other than employment, this is where you should keep your records.

TRANSITIONAL MONEY
Some financial records represent what you are doing to your money, but others show what your money is doing, with or without you. Bank statements for checking, savings, and trusts represent collections of funds that are often in transition. They may accrue interest or have fees associated with them, so take time each month to make sure these accounts reflect what you think they should.

Brokerage statements reflect investment information. You’ll separate these by investment type: retirement, college savings, goal-related (like a vacation fund or Christmas Club account), first, and further sub-categorize (and alphabetize) by company. So, in the Retirement hanging folder, you might have interior folders for your 401(k), an old 403(b), IRAs with Fidelity and Vanguard, and so on. Each account will have its own folder.

SIMULATED MONEY
Do you ever wonder what to do with paper that isn’t money, but is nonetheless valuable? This subcategory is generally where you’ll keep records reflecting monetary value. It’s not money in your pocket, but it’s the equivalent.

These files might include quarterly or annual statements reflecting either regular or atypical benefit plans for your job, such as if you’re vested in an employee-ownership stock program.

You can also have a folder in this section for gift certificates, gift cards and store credits so you can keep track of what monetary value you posses or are owed.

However, do not keep stock certificates, Bearer Bonds, or other valuable paperwork in your general family files. Papers of significant value should either be kept in your safe deposit box or in a fire-proof safe.

TAXES
When dealing with taxes, you want to first consider what you’ll need to prepare your upcoming tax returns.

For the CURRENT year, I always suggest having at least one tax-prep folder, but you can expand upon that idea and have one for medical expense records, one for charitable donation records and a third for “other” tax deductible items. This January, when you start receiving W-2s and 1099s, you should immediately carry them to your filing system and pop them in your TAX PREP 2007 file folders.

While you must maintain careful tax records and supporting information, you only need to keep the most recent year or two in your active family/personal files. If you’re short on space, everything else can go into easily-accessed file archives, such as in a banker’s box.

FINANCIAL HISTORY and LIFE
It’s important to maintain control over your financial and credit history. To do this, check and download your free credit reports from the three major credit bureaus on an annual basis. You can keep them in a folder entitled Credit History (isn’t that creative?) – it’s not necessary to keep a separate folder for each report from Equifax, Experian and Trans-Union.

This is the ideal sub-section to keep your Social Security statement folder. Each year, approximately six weeks prior to your birthday, the Social Security Administration mails you a statement of the current status of your account. (It’s printed in black and green ink on white paper and looks like a short brochure.) It’s important to save these statements to plan your retirement needs; be sure to check the accuracy of the statement before filing it away each year.

[Editor’s note: Since the original publication date, Social Security has ceased mailing statements; you can access your statement online, as we discussed previously. Printing copies, or making PDFs of them, so that you can keep your own records, is still a good idea.]

This sub-section would also be where you could keep a printout of your monthly budget spreadsheet or holiday budget, your Big Ticket receipt file to keep track of information on large purchases, as well as any other records you have regarding your financial history or plans.

For each of these sub-categories, within each folder, it’s usually best to file in reverse chronological order. You’re more likely to need to quickly access something that’s recently been filed.

That’s it. Your financial files represent money going out, money coming in, money sitting around (and hopefully growing), pseudo-money, the money information you have to provide to the government…and the history of your financial life.

Since we’re talking about finances, the question always arises, “What do I do about receipts?” Next week is Thanksgiving, and you’re likely to amass a large number of receipts on “Black Friday“, so we’ll be finishing our conversation on financial files by talking about keeping receipts.

Coming up after Thanksgiving: Legal and Medical files