woman financial documentsIs financial clutter getting you down? Do you see bills, tax documents, and bank statements everywhere you look? If you are like millions of Americans, your financial documents are anything but organized. Rather, they’re scattered from one end of your home to the other — under your bed and in the kitchen cabinet. Do you know where to find what you need?

Organizing your financial documents may sound like a tough task. It is. Fortunately, once you have a system in place and see how easy it is to get by when you are organized, you’ll never look back. If you’re fed up with your financial clutter, follow these five steps to get organized.

1. Get the Tools You Need for Success
Staying organized involves more than finding a drawer and putting all of your documents in it. Your decision to get organized is a “back to school” moment. You’ll need the following:

  • A file cabinet or storage crate
  • File folders
  • Post-it notes
  • Paper clips
  • Envelopes

Pro Tip: Use hanging folders in a filing cabinet for optimal organization. Just label each folder according to its contents, like taxes, bank statements, insurance, savings, and bills. If you’re keeping track of personal or business receipts, Shoeboxed can help by scanning and organizing your receipts for a small fee.

2. Gather Your Clutter
The toughest part of organizing is getting all of your documents in one place. Do you know where to look? Are you willing to spend a couple of hours on this step alone? In this early stage, you don’t have to worry about being neat. Just get everything in the same place, so you can weed through the clutter and then start organizing.

Pro Tip: This is the toughest step for me, because I never know where everything is. Set aside some time so you can be comfortable and patient, and use this checklist for documents:

  • Bank account statements
  • Mortgage documents
  • Receipts
  • Insurance information
  • Tax forms

Of course, you’ll find a lot of subcategories, but this checklist will give you some goals as you search the different rooms of your house for your old paperwork.

3. Take Your Time
Once you’ve gathered all of your statements, receipts, and other files, you’ll realize one thing: Sorting is going to be a time-consuming process. You can’t avoid it. But you can make efficient use of your time.

First and foremost, consider the checklist from step two. Designate an area of your desk or table for each of the categories, and just do some top-level organizing. Once you have all of the papers in their general areas, you can see which topics will be the toughest to tackle. Those are the ones to go through first, and you should break them down into subcategories. For insurance, for example, you’ll use separate folders for car insurance, health insurance, and life insurance. After you get your piles ready for subfolders, sort each one in chronological order so you can easily find the right statements when you need them.

Pro Tip: Once you’ve gathered all of your paperwork, try to gauge how much time you’ll need to sort through everything. Organizing your financial documents is not something to do to pass time during commercial breaks or while the coffee’s brewing. You might need two or three hours, so set that time aside so you can avoid distractions.

4. Don’t Get Lazy
Believe it or not, getting organized is the easy part. Staying organized is much more difficult. If you’re not careful, you’ll quickly end up right back where you started. Don’t turn your hard work into wasted time. Once you’re organized, every time you receive a new financial document — even if it seems insignificant or it’s been a long day — make sure you put it in the appropriate folder.

Pro Tip: I’ve always had issues in this area. At the beginning of the year, when I am getting ready to file my tax return, I get organized. Everything looks good up until April or May. Soon enough, as summer settles in, things get out of control again. To solve the problem, I’ve made filing part of my daily mail routine. Instead of skimming through mail as I walk through the door, I sit at my desk to open my mail, and I immediately put financial statements in their appropriate folder. I also shred anything that I do not need to keep.

5. Shred It!
Staying organized also means knowing when to throw things out, otherwise your clutter will pile up again. While you need to keep many documents, like tax returns, do you really need that grocery receipt from 5 months ago? What about your bank statement from July 2008?

Getting rid of paperwork makes it a lot easier to stay organized. Less paper, less potential clutter. But don’t just toss old statements in the garbage or recycling bin. Shred any documents that contain sensitive personal or financial information. Even though you think no one’s sifting through your garbage, many cases of identity theft start with thinking “it won’t happen to me.”

Pro Tip: The IRS suggests that you keep tax return information for seven years. That sounds fine, but I don’t trust them. Instead, I keep all of my tax documents no matter how old they are. As long as they are organized they don’t take up much space.

Final Thoughts
Money mail probably appears in your mailbox almost as frequently as junk mail does. If you’re overwhelmed by utility bills, bank statements, and quarterly retirement updates, you need a system in place to stay organized. If you keep tossing paperwork in the same overflowing box, it’s almost as bad as not saving the paperwork at all. When the phone call comes, will you be prepared to find the one statement you need to refute a bank error, or defend an old tax deduction?

Organizing your financial files isn’t just a spring cleaning project. It’s a year-round process, and if you follow these five steps you will be well on your way to success. What tips and tricks do you use to stay on top of your filing system?


quit job coffeeOn January 1st, I officially became self-employed full time. If you’re considering to the same, know that that the transition will be a challenge, and even with strategic planning, there will be curveballs and unforeseen circumstances that you’ll have to deal with. However, with some common sense, diligence, and foresight, you should be able to make the switch without too much financial distress.

There are a number of simple tips you can follow to keep your finances on track:

1. Increase Your Savings
Unless you are one of the few who already has a venture generating enough profits to easily pay your bills, you’re going to have to tighten your belt financially. Among other things, this will involve saving on groceries, home energy, cell phone, Internet, and cable or satellite TV. A quick review of the competition should provide you some opportunities to save.

Next, you’ll want to convert anything you can into cash. Start by selling unused small electronics or other unneeded items on the Internet by using Amazon or eBay. Larger items, such as old gas grills or heavy tools, can be listed on Craigslist, which allows you to avoid expensive shipping charges. If you have items that cannot be sold, consider donating. Although you won’t see real cash, you can write off these donations at tax time.

2. Review Your Credit Cards
There are several things to be aware of regarding credit cards once you transition into full-time self-employment. First, be certain that your rewards programs are conducive to your needs. If your new venture involves frequent air travel, find a card with great airline rewards. If you regularly travel locally, find a card with beneficial gas rewards.

Make sure that you cash out any and all rewards on your existing accounts – the best way to do it is to request the reward in the form of a statement credit. You’re certainly going to need to get your hands on all available capital, especially in the beginning.

3. Research Affordable Health Insurance
When self-employed, you’ll be on your own regarding health insurance. While COBRA may be an option, it is advisable to first consult with a private health insurance professional. In some instances, you may be able to find a rate that is better than that of COBRA. I recently obtained private health insurance for a monthly premium that costs less than what my former employer offered. Of course, if you have a preexisting condition, your only affordable option may be to go on COBRA.

Additionally, you should consider initiating a health savings account. If you choose a high deductible health plan, this is a great idea. Your money will grow tax-free as long as you use the funds for qualified medical expenses, and you can use these funds to satisfy your deductible.

However, there are certain restrictions and eligibility requirements. For instance, you cannot be older than 65 or be claimed as a dependent on anyone’s tax return. There are also annual caps as to how much you can contribute per year.

4. Continue to Save for Retirement
Despite the fact that your income may temporarily decrease, you’ll want to keep your retirement planon track. A previous employer-based 401k plan should be rolled over into an IRA. You should also consider implementing an individual 401k plan or an SEP IRA if you’re able to contribute more than the maximum to an IRA.

Furthermore, if you previously had a 529 college investment plan in which the contributions were deducted from your paycheck, switch this to your checking account, so the program will not be neglected.

5. Pay Your Taxes on Time
I recently met a small business owner who had been up and running since the beginning of  last year. When I asked her about paying quarterly self-employment taxes, she said she hadn’t yet looked into the subject.

Don’t make this mistake – the IRS will be coming for you soon enough if you don’t pay your taxes on time. There are deadlines each quarter, and missing these can cost you big time with penalties and interest. Notate the due dates on your calendar, keep accurate records, and make your payments promptly.

Final Thoughts

The financial aspects of being self-employed can take a lot of your attention, but it’s important that you do not neglect your physical well-being. The exercise that you used to get while working your day job will no longer exist. Unfortunately, I put on about fifteen pounds before I realized this. Plan on and factor in a daily exercise regimen once you make the move. It’s much easier to manage your weight than to have to lose weight.

Ultimately, quitting your day job has many benefits and is very satisfying. With some hard work, creativity, and sacrifice, almost anyone can achieve this goal.

What ways can you think of to save money as a small business owner?


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