Even if you’re determined to organize your personal financial life, it’s easy to get lost. Don’t try to figure out and master all the personal organizers and electronic gadgets that are supposed to make it easier. Meanwhile that stack of unattended paperwork multiplies like dust bunnies behind a desk.
Disorganization and procrastination can be difficult behaviors to reverse, but it’s worth the effort. Taking just a few steps can reduce stress and lead you on a path toward financial peace of mind. Here are some expert tips to help you cut through the clutter in your personal financial life:
Stash the paperwork
Each year you can count on receiving a heap of tax-related mail. Shove all that paperwork in the same file folder so it’s out of sight, yet easy to find when you’re ready to deal with taxes. Don’t buy a special file. Don’t scan all the documents for systematic filing on your computer. Don’t lose sleep debating whether information for the Schedules A and B should be alphabetized under A or B. Just find a manila folder and shove everything into it. You can sort it all out at tax time.
Make non-monthly bills a non-factor
Do certain expenses sneak up and bite you in the budget? Bills for auto insurance, car registration, property taxes and homeowner’s insurance has sharp teeth, but they don’t need to draw blood. Simply add up anticipated expenses, divide the total by the 12 and deposit that amount in a savings account every month.
Auto pay is the way
You’ve resisted paying your bills through electronic debit because you like to control what gets paid and when. Strange how that control can lead to frustration when you forget to pay a bill on time. You suffer late fees. Or worse, your forgetfulness results in negative blips on your credit report. Direct payment plans are free, safe and easy to establish. Plus, they eliminate the cost of mailing checks. Mortgage companies, utilities and even credit card companies are eager to help you get started.
Two cards may be better than one
If you have more personal credit cards than you can count, how can you possibly keep track of all the due dates, minimum payments, annual fees and interest rates? Get rid of all your cards except two.
Make one a debit card. It works with ease like a credit card, but the amount you spend is automatically deducted from your checking balance. Only use a second card if you must carry a balance, and don’t make new purchases with it. If your credit card debt is too big to consolidate on one card, organizational peace of mind may not be your top financial priority.
What to keep and what to toss
For some people, getting organized simply involves dumping paid bills, bank statements and other financial documents in the circular file or running them through the paper shredder. The purging process may have a cleansing effect, but you’re certain to throw out records you should have kept. It’s safe to toss paid utility bills after one year. Keep monthly bank and other financial statements, including income tax returns, for three years. Store wills, trusts, powers of attorney, birth, marriage and death certificates, adoption and custody papers, investment records, insurance policies, car titles and property deeds in a safe place. It can take months to replace lost originals. Scanning documents into your computer will work for quick reference, but won’t make them legally useful. You’re still going to need the originals.
Stuff your stuff using “account aggregation”
Account aggregation is an intimidating phrase you may have heard in conversations about getting organized. Basically it’s a service that allows you to track an unlimited number of online accounts in one place.
One example of an aggregator is Yodlee.com. IHateFinancialPlanning.com calls its account aggregation tool My Shoebox Online. Data from Web sites is collected, summarized and delivered to your personal account, which you access using just one password. You can track your airline miles, e-mail or cell phone accounts, checking, savings, credit card, brokerage accounts and more. Talk about convenient, secure and private; even the dust bunnies won’t be able to invade it.
Austin Bookkeeping & Consulting
Cheryl Finfrock, Owner
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(512) 426-9217 or email cheryl@austinbookkeeping