Setting a System

Lat weekend was one of the more exciting weekends I’ve had in a while.  I spent 2 whole days of pure bliss dealing with . . . paperwork!  See below? 

This is what happens when you a) get released from the military b) buy a house and c) move cities all while alternating between your parent’s spare bedroom and a hotel room.  I successfully avoided those files for 3 whole months. 

Why is the state of your paperwork important to your financial health.  While the first thing I do when someone wants help with their finances is tell them to get me the numbers.  By numbers I don’t mean the guestimates that you hope you’re spending.  I mean I want to see all the statements that say exactly what you spend and what you owe.  In order to do that you need to be able to find the paperwork that has all the numbers. 

Even if you’re in good financial shape a poor filing system can trip you up.  Ever not pay a bill because you didn’t find it until a couple weeks after it was due?  Do you avoid filing taxes because you can’t find what you need?  The more organized your paperwork, the more organized your money is likely to be and the greater chance you have of staying on an even keel financially. 

There is no one right way for a filing system to run but mine runs by these simple rules. 

1.     Files fall into three separate catagories: monthly, yearly and archives. 

2.     Files that you use every month (such as monthly bills) should close to your workstation and easy to access.  It should take you all of 10 seconds to find the documents you need in these folders. 

3.     Yearly files will most likely be put somewhere out of the way.  They have taxes, and records such as quarterly investment reports.  These files need only be accessed 1-4 times a year.  It should take you all of 60 seconds to find the documents you need in these folders. 

4.     Archives hold paperwork that you need to hold onto for 7 – 10 years (like taxes from previous years) or that will only be used in exceptional cases (like the legal documents proving that you own your house).  They are generally packed away out of sight but you should still be able to find the documents you need in under 5 minutes. 

If it take you longer then the suggested time above I would suggest that documents aren’t being filed in the proper place (there should be no ambiguity of where a document should go) or your file aren’t specific enough (instead of house they should be subdivided into insurance, maintenance, and mortgage payments). 

It took two days but everything is once again in order.  Doesn’t it look beautiful?