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Organization Tuesday: How's Your Financial Health?: Organizing Your FinancesViews: 603
Nov 18, 2008 5:10 amOrganization Tuesday: How's Your Financial Health?: Organizing Your Finances#

Julie Bestry
What is a good "system" for handling bills as they come into the house with all the other mail?

After our brief break, I'm back to answering questions about personal organizing to help you achieve balance and mastery in your home and professional life.

The question I was asked was a good one.  It recognizes that good money management doesn't just happen, any more than exercise, diet, continuing education, marketing or anything else in our lives.  We have to be present (i.e., focused), develop rituals that keep us on-task,  and commit to doing the necessary work.

It's easy to get overwhelmed by financial paperwork.  However, disorganized finances can cost you more than the $39 average late fee charged by credit card companies.  Your payment history accounts for up 35% of your credit score, so disorganized finances can end up costing you thousands of dollars in higher mortgages, car loans and credit card interest rates.

Financial clutter also means missed tax deductions, lost personal financial opportunities and failure to detect identity theft.  Also, in terms of business, banks and venture capitalists are going to be very wary of lending money to solo-preneurs who have illustrated a lack of personal financial management.  After all, if you can't handle your own money or manage to pay your cable bill on time, how can they trust you to be responsible with the money lent to you to start and grow a business?

Finally, a 2004 study from New York University found that people who have control over their finances are, on average, 39% wealthier than their less organized peers.  These tips on organizing your finances can help you get control and feel like a lottery winner!

1)    SHOW UP FOR MAIL CALL—Open the mail every day!

It sounds simple, but the rules that govern the rest of life govern your finances, too.  Woody Allen is famously quoted as saying "90% of life is just showing up."  Well, a large percentage of handling your finances starts with knowing what's actually going on, which means opening your mail!

If you're overwhelmed, create a ritual where you open the mail every day at the same time, perhaps just after lunch or just prior to dinner.  Empty today's receipts out of your wallet and record them in your register, too.  A few small bites are easier to handle than an enormous meal.

Some people are so anxious about debt that they put off opening their bills until it's too late to pay them on time. But financial health is just like physical health-- you're better off going to the doctor and getting a diagnosis, even a scary one, so you can start treatment.  Once you know how much you owe and at what interest rates, you can start getting healthier financially.

2)    BUILD HOMES FOR YOUR MONEY

If you've read even a few of my Business Consortium posts here on Ryze, you know that the Golden Rule of Organizing is:

Don't put things down.  Put them away!

And "away" merely means creating homes where your possessions belong.  Creating homes for your money is simple:

Keep Your Cash In One Place--Carry a wallet.  I don't care if it ruins the line of your fancy suit, or if you feel too girly carrying a purse.  Cash does not belong loose in your pocket(s) or in little piles around your desk, at the bottom of your briefcase or in the candy dish/ashtray of your car.  Keep your currency in your wallet, unfolded, and preferably right-side-up and facing the same direction, in order of denomination.  Do I expect you to re-sort your bills after every purchase?  No.  But at least once a day, take ten seconds to straighten out your money.  If you're trying to schmooze the maitre d' at at the fancy-schmancy restaurant where you're pitching your dream client, do you want to take the chance of accidentally slipping the guy a $1 (or worse, a Bed, Bath & Beyond coupon)?

Create a Bill-Paying Center--Keep a basket with all your bill-paying essentials—calculator, stamps, return-address labels, envelopes.  Put it where you pay your bills…and put your bills there as soon as they arrive, in chronological order of when they're due!

You have probably already heard how strongly I feel about using a tickler file.  Whether we're talking about personal or business bill-paying, storing your to-be-paid bills in either a standard, store-bought tickler file or one you make yourself (with 43 folders) will work miracles toward keeping your bills orderly and ready for your attention.

Create a Filing System for Archiving Your Records--You need to have the following to keep your records straight:
  • File folders or 3-ring binders for bank statements and investment accounts, maintained in reverse chronological order
  • A file for every account payable where money is going out—household bills like phone and cable, credit card bills, loan payments—and for every source of income
  • Files for past tax returns and supporting materials
  • Files for the current year's tax preparation-including any W2s & 1099s you get in January, as well as for receipts for business expenses, charitable donations and medical expenses you get throughout the year.
If you're married, make sure your spouse knows how the finances are organized and the passwords for online account access.  For more on keeping passwords straight, take a peek at my blog post from 10/14/08.

3)    MAKE AN APPOINTMENT to handle your bill paying and filing

Give your finances the respect they deserve—schedule time on the calendar to pay bills and organize your finances just like you would for a doctor's appointment.  Don't merely write the task on your calendar; keep that time sacred.

Have all your resources prepared so that everything you need is in its home for when you start paying bills.  I encourage scheduling a weekly bill-paying day; for example, Tuesdays.  Then, each time a bill arrives, pop it in the slot of your tickler file that corresponds to the Tuesday prior to when the bill would need to be mailed, if you mail your bills.  If you pay bills online, select the Tuesday prior to when the bill is due.  (Why Tuesdays?  Mondays are when we have most of our national holidays, and Fridays are when we tend to take long weekends. Neither makes a good bill-pay day due to the likelihood of tasks getting "bumped" for life.   Tuesdays are also early enough in the week that if you are delayed, you still have a few good days to "slide" your work forward in the tickler file.

On your scheduled day, pay your bills, file your paperwork and shred anything with your social security or account numbers if you aren't going to be filing it.

Commitment is key—it doesn't matter whether you use paper checks and the register you get at the bank, or online bill-pay and software like Quicken or Microsoft Money.  But you do need to keep track of checks, debit card purchases and ATM withdrawals on a regular basis.

4)    GET AN ANNUAL CHECK-UP TO STAY FINANCIALLY HEALTHY

Plan one weekend a year, perhaps right after you file your taxes, to check the health of your finances.

•    Go to AnnualCreditReport.com to get free credit reports from Equifax, Experian and Trans-Union.  The federal government requires that consumers get free access to their reports each year, but you should also pay once per year to get your FICO credit score.  This helps you make certain you haven't been a victim of identity theft, and also assure that no mistakes go unchallenged.

•    Review whether you are carrying enough insurance, especially if you've added new family members or income levels have changed.

•    Confer with a financial planner or experienced friend on the balance of your investments to see if you're on target or to create a plan for the future.


In summary, the best system for handling bill-paying is a simple one.  Make sure you open your mail every day and store your bill-paying tools where they are easily accessible on the days you schedule for addressing financial tasks.  Monitor your financial health and keep up your financial maintenance, just like you'd visit your doctor and dentist and perform daily tasks to maintain your health and hygiene.

Be healthy, wealthy and wise.

--
Julie Bestry, Certified Professional Organizer®
Best Results Organizing
"Don't apologize. Organize!"
organize@juliebestry.com
Visit http://www.juliebestry.com to save time and money, reduce stress and increase your productivity

Private Reply to Julie Bestry

Nov 18, 2008 1:29 pmnip the mailbag before it nips you/Organizing Your Finances#

Paul Finkelstein FIERCE LEGACY ENTREPRENEURS


Hey!
The mail is where all DIS organization starts here.
:)
Good topic!!!!
Where do you open YOUR mail Julie, others???
Need input.
This little act or culprit has caused more boxes of papers than any other
disorganization event.
Signed,
Nip the Mailbag before it nips you.
:)

Private Reply to Paul Finkelstein FIERCE LEGACY ENTREPRENEURS

Nov 19, 2008 2:59 amre: nip the mailbag before it nips you/Organizing Your Finances#

Julie Bestry
Where do I open my mail? Well, we have outdoor mailboxes, so I get my mail at the mailboxes and immediately trash all non-personalized junk mail. Well, when I walk into my home, I stand at the counter next to the trash, and open all the mail there. Really, you have to open your mail near the trash and/or shredder for maximum efficiency.

Financial mail gets opened first; I discard the outer envelope and all "shiny" advertising materials. Anything I don't need to act on or file that bears a Social Security or account number gets shredded. Right away.

I then walk immediately to my tickler file to file the bills (fully unfolded with the payment envelopes "behind" and the flaps tucked in front, "nibbling" the bill) according to the date I intend to pay them. Other financial mail (like IRA quarterly reports) go directly to my file box and get dropped in the front of the appropriate file(s), as I file in reverse chronological order. As such, I can file perhaps 10 pieces of paper (I rarely have that much in one day) in about 30 seconds. You could plop all the mail that needs to be filed in a file box and do it weekly, but then it becomes onerous, like a sink-full of dishes. Do it fast, and do it now.

Back to the counter. Non-financial mail gets reviewed. If something requires my action, I either do it right then (phone call, fill in a response) or I put it in the tickler file for the date I intend to do it. I live out of my tickler file, which is where EVERY piece of paper requiring action gets kept.

Magazines and other things I want to read go in my reading pile in the living room. Coupon-type things go to the home set up for them.

Seriously, unless I've been gone more than three days, I can process all of my incoming mail in three-to-five minutes. And so can you. If you remember to brush your teeth every day, you can practice so that it's just as natural to open your mail EVERY SINGLE DAY, in the same place, in the same way.

FYI, if you're away for a week (like if you're traveling for Turkey Day) and have your mail stopped, picking up that giant box of mail can be daunting. In such a case, bring the entire pile to an empty table, or bare spot on the floor. Sort by all those same categories: financial, to-do, reading material, coupons, etc. and then process one section at a time. All the bills, to the tickler; all the to-dos, to the tickler. File, shred. Put the coupons and reading material in their homes. Pat yourself on the back for NEVER PUTTING ANYTHING DOWN, and ALWAYS PUTTING THEM AWAY.

--
Julie Bestry, Certified Professional Organizer®
Best Results Organizing
"Don't apologize. Organize!"
organize@juliebestry.com
Visit http://www.juliebestry.com to save time and money, reduce stress and increase your productivity

Private Reply to Julie Bestry

Nov 19, 2008 3:04 amre: re: nip the mailbag before it nips you/Organizing Your Finances#

Julie Bestry
Oh, and one more thing. If you repeatedly try and fail and keeping to a schedule, involve your spouse, child or roommate to keep you on task and WATCH you get the mail, open it and process it. Tell them what you are supposed to do, and give them a keyword to say when you're wandering off task, like "zebra" -- such a word needs to be entirely non-judgmental, unlike "Hey, you stopped opening mail to fiddle with the radio or make a phone call before you finished processing!" Just "zebra", or "cookie".

If you live alone and nobody can watch you open your mail, enlist a friend, preferably one who is bored (a retiree or someone with a broken leg) to call you at the same time each day and stay on the phone with you, even if you're not TALKING to one another, while you process the mail. When you're done, you get back on the phone, say "I'm done" and hang up the phone. You'll be less likely to get distracted if your phone is off the hook and Jane or Joe is humming the Jeopardy theme song.

If you don't know anyone, have no friends, and are completely curmudgeonly, set the alarm on your cell phone, to go off at the same time, the time you want to get the mail. Then keep hitting the SNOOZE for the alarm until you've finished processing the mail. The annoyance of it will keep you focused on one thing--processing the mail! --
Julie Bestry, Certified Professional Organizer®
Best Results Organizing
"Don't apologize. Organize!"
organize@juliebestry.com
Visit http://www.juliebestry.com to save time and money, reduce stress and increase your productivity

Private Reply to Julie Bestry

Nov 19, 2008 4:02 pm re: nip the mailbag before it nips you/Organizing Your Finances#

The Eagle: Motivating Champions Around The World
I am a Unusual Person as I don't use Banks or credit cards. I am a cash only Person or Money orders for bills.

I get my mail every day and I open it right up when I get to my Room and if it is a bill I put it in the To Pay file. If it is junk I throw it away right away. If it is a magazineI put it in the Compartment tray where I have my Magazines.

I get paid every two weeks. I set out and make the envelopes out for my Next Payday bills to pay. Like today I got my Money orders when I went grocery Shopping and now while I am doing my E-Mails I make out the Money orders then put them in the Envelopes and Then I bring them over to the Office to go out when the mailman comes.

I always set up the Nexst payday Bills that need paying and put them right on my Calendar on my desk. I don't have too many monthly bills. But the ones I need to pay or send in I already have the envelopes made out for them.

I am a very organized Person and nothing Unexpecting pops up. I have always been an organized Person. Sometimes I think I am too Organized but it works for me.




Richard "The Eagle" Motivator
Live and Act Like a Champion Today!!
http://www.eagleenterprisesusa.com/
http://abhp-network.ryze.com

Private Reply to The Eagle: Motivating Champions Around The World

Nov 20, 2008 5:31 amre: re: nip the mailbag before it nips you/Organizing Your Finances#

Julie Bestry
Hi, Richard. Thanks for sharing. Being cash-only is very unusual, though I can see it having some advantages from an organizational perspective. And, of course, you can't ever be overdrawn (something some of my clients can only dream about). Enjoy it while you can; I suspect that cash will become a curiosity in our lifetimes. We're practically the only part of the world still using checks, and electronic transfer of funds is cheaper to process.

Your organizing system is great, and is similar to what I encourage my clients to do when they're digging out from under--I have them go cash-only for all unscheduled, non-fixed expenses (food, gasoline, etc.), though not for bills.

But I do have questions, especially as I have barely used cash in twenty years. In fact, other than when I travel and need to tip in cash, I rarely keep more than $2 on my person. Germs. ;-)

I've never seen or used a money order. Does everyone you encounter accept them? I know I wouldn't accept them from clients. I generally don't accept cash, as I've got no way to recoup a loss if one of the bills is counterfeit. (Yes, I know it's legal tender, but my clients use their cancelled checks as receipts.) How do you track whether it's been received if you mail it? With my bank, I can see the front and reverse of the check online once it's cleared; if I pay online, I have proof of payment. How do you prove payment has been made, and what happens if you send the money order but it's not received or credited? With a check, you just write a new one and/or stop payment on the old one.

Next, if you have no bank, how do you preserve the safety of your money? I hope/assume you have more money to your name than just what you get paid every two weeks, or else I can't imagine what you'd do if you got sick, or you had an emergency. How do you safeguard your money if you only use cash? Do you have a safe? When you travel, do you have to carry all your money with you? (Wait, maybe you shouldn't answer these in public.)

May I ask, how did you buy your house (if you're a homeowner) or get qualified for an apartment? In most places, you can't be authorized to rent a home or car without bank accounts and a credit history, and I assume you can't buy a house without a bank account and credit history. About 15 years ago, when I was still working in TV and we went from checks to direct deposit, one of our employees refused to get a bank account, and he was told that he could quit or get paid by DD. He got a bank account. :-)

What happens when you fly? I was under the impression that anyone who flies on a ticket purchased with anything but a credit card is immediately flagged by security as a high-risk candidate. Do you get a private inspection every time you fly?

Finally, I'm afraid I don't know that much about your professional background outside of your motivational posts. Do you own a business? If so, do you find vendors have difficulty with this form of payment? How do you prove to the IRS that you're actually the one due the deductions if the expenses aren't debited from an account on which you are the named owner?

I realize I've taken us off track, and I don't mean to be too personal, but I found your story fascinating. Please only answer if you feel comfortable doing so. Thanks in advance for indulging my curiosity.

--
Julie Bestry, Certified Professional Organizer®
Best Results Organizing
"Don't apologize. Organize!"
organize@juliebestry.com
Visit http://www.juliebestry.com to save time and money, reduce stress and increase your productivity

Private Reply to Julie Bestry

Nov 20, 2008 2:33 pm re: nip the mailbag before it nips you/Organizing Your Finances#

The Eagle: Motivating Champions Around The World
I realize not a lot of people use cash and as you said ae afraid to carry a age sum with you. So far, I have never had a problem. As for owning an apartment or Home. I work for a small Independant Motel and I have a room at the Motel which is part of my Compensation.

As for flying or Owning a Car I do not do either. I use Taxi's or Bus when I go to visit my Family.

All the vendors I use Accept Money orders. I have never had a Problem ith buying something even my Life Insurance Companies Accept Money Orders. A money order always has a receipt with them which I attach to the Invoice then keep in my Files. So far I have never had a problem.

I have never had a receipt of anyone not getting the payment but if it were to happen then I would trace the money order and see who cashed it and request a copy if needed to prove payment.

Hope this helps explain a few things as I din't mention specifics for security Purposes.

What do you do with a person who can only pay cash or with a money order? Do you turn away business? Or what.




Richard "The Eagle" Motivator
Live and Act Like a Champion Today!!
http://www.eagleenterprisesusa.com/
http://abhp-network.ryze.com

Private Reply to The Eagle: Motivating Champions Around The World

Nov 21, 2008 4:13 amre: re: nip the mailbag before it nips you/Organizing Your Finances#

Julie Bestry
Thanks for your great reply, Richard. That's a novel housing option--living in a motel as a perk of employment.

As for the money order getting lost, maybe I am misunderstanding how this works. You pay the post office cash for a money order, and then mail the money order, and the recipient can cash it like a regular check, only the post office pays the bank? Is that close? If the money order gets lost in the mail, you have proof you gave money to the post office, but will they give you the money back if the check is never cashed because it goes missing?

What about if you pay for something and it's never received, or something's wrong with it? With a credit card, you can have them issue a chargeback and then you don't have to actually pay, but is there a way to get your money back if a the recipient of your money order is dishonest?

You must have to be very organized to live without a car at your disposal. This has been very enlightening--we have very different lives, so much so that I feel like we're having a cultural exchange. :-) I'm guessing your life is much more like my NYC friends, where one can shop for groceries or get to a doctor or whatever without having to drive many miles. I've never lived in a city where one could hail a taxi--I've always lived in suburbs where you'd have to call and order the taxi and wait for it to show up. Not counting the schoolbus (long, long ago), I've never been on a bus, though I've been on subways in big cities like Boston and DC.

As for your question, in seven years, I've never had anyone ask about or mention a money order, and until talking with you, I hadn't enountered someone who (as far as I was aware) wasn't using a bank account...since that TV employee 15 years ago. I had two residential clients want to pay me partly by check and partly in cash (to keep spouses in the dark as to how much they were spending on my services), but this was many years ago. I can't remember anyone ever wanting to pay in cash besides those two. And, of course, my business clients can't pay by cash, as they'd need the financial tracking for the IRS and internal audits.

From a security perspective, I'd never feel safe carrying the cash equivalent of what I make in a four-hour session. A check can have payment stopped, but cash, once gone, is lost forever. From an IRS audit perspective, I deposit each check in my business account the day I work with the client. The IRS can match every appointment with every transaction, if ever needed.

Legally, I'm not sure I could refuse payment by cash, but I can't envision a situation where I would have to choose between accepting cash or not, as I wouldn't have a client who couldn't pay by check, only one who might not want to. 99% of my residential clients are homeowners, with a few renters in the mix--they'd all have to have bank accounts. My bigger issue is usually explaining why I don't accept credit cards. When they realize eliminating credit card merchant fees keeps my overhead, and therefore their costs, low, they seem quite pleased.

So, while I wouldn't be in a position where a client would have no choice, if I were faced with a client who refused to pay except by cash, I'd probably not engage that client. I'm selective about my clientele with respect to a variety of variables, so I guess that would just be another.

Thanks for giving us something so interesting to think about.

--
Julie Bestry, Certified Professional Organizer®
Best Results Organizing
"Don't apologize. Organize!"
organize@juliebestry.com
Visit http://www.juliebestry.com to save time and money, reduce stress and increase your productivity

Private Reply to Julie Bestry

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