It seems like I can tackle anything once it’s organized however getting a project organized is sometimes the biggest hurdle. That’s why I am dedicating an entire series to just organization! Your personal finances will not be successful if monthly bills and account statements are in various places throughout your home. When I think back over my financial pains and victories, I can usually identify an over-commitment in one area which directly caused an imbalance in everything else. And usually the 1st thing to suffer was my organization. That meant that a financial blunder was lurking around the corner—a late fee, a NSF (the naughty, sinking fund), or a disconnection notice. Oh yeah, been there, burnt the t-shirt and I’m not going back!
Two Key Points to Remember:
- Nothing is perfect
- Be prepared to change whatever is not working for you.
Here’s a little quiz to help you gauge your current system:
|Do you know how much you owe, to whom you owe it and when it needs to be paid?||Yes or No
|Do you have a central location in your home or office where you store all, if not most of your monthly bills and receipts?||Yes or No
|Do you have a notebook, worksheet, mobile app, or banking site that you use consistently to monitor your spending each month?||Yes or No|
So how did you do?
For most people, you have to organize your bills and statements as they come into your home. That’s what I call your Mail Center…the place where you physically stop and assess your mail as it comes through the door. Most of us within 30 seconds or less can identify the personal goodies (my Pottery Barn catalog), blindly pass the bills, snarl at the junk mail and then throw most of it into a huge pile called the Mail Center! And this is where we begin!
If this looks familiar to you, take a deep breath. INHALE, EXHALE, but please do not place another piece of mail on this pile!
This is probably a major, no, a really, really big source of frustration and procrastination for you. But since you are now using CommonCents (Get it? Common sense, the play on words, the blog title…Ok) to put your finances in order, this pile must go! Let’s turn that pile into the order and serenity that shows just how smart and savvy you really are. With a few simple changes, your Mail Center will be:
- Easy to use.
- Easily accessible.
STEP 1: FWF–Folders Work Fine!
For years I have used the simple file folder system and this will work for you too. Simply take a few folders, (hopefully there are some laying around the house), label them and place them in or near your mail center. Your labels should be very high-level at this point because the main objective is to breakdown the vicious and overrun mail pile into manageable size pieces. In Part 4 of this series, we will discuss where and when you should go through your budget and then you will have the opp to make your folders more specific. But for now just think big picture as it relates to your monthly expenses.
The labels for your folders should go like this:
1) Fixed Expenses
3) Credit Cards
4) Other Essentials
Folder 1: Write ‘[texthighlight color=”pink-vibrant” ]Fixed Expenses[/texthighlight] ’ on the outside of the folder. Place in it bills that you receive monthly whose amounts are typically fixed. The usual suspects are the mortgage statement, the car payment, student loans and any insurance premiums (health, life, auto, etc.) that you personally pay on a monthly basis.
Folder 2: Write ‘[texthighlight color=”pink-vibrant” ]Utilities[/texthighlight] ’ on the outside of this folder and place in it each of your utility bills. If you receive any of your utility statements via E-Pay or BillMinder through your bank, that’s great—always leverage technology. Just remember to regularly login and check your statements for usage, due dates and other critical notices.
Folder 3: Write ‘[texthighlight color=”pink-vibrant” ]Credit Cards[/texthighlight] ’ on the outside of this folder because even the gremlins need a place to lay their heads. Sidebar: You will never hear me speak positively about credit cards so please don’t look to this blog to gain knowledge information regarding the best credit cards (an oxymoron) to carry, who has the best Frequent Flyer miles, 0% free interest, yada yada yada! Credit cards are a viscous trap and they rob you of wealth. Even the best foolish plan to “manage” debt, is still foolish. So we forgive ourselves for buying into the hype but now that we know better, we will do better. – Thank you Dr. Maya A. & Oprah
Folder 4: Write ‘[texthighlight color=”pink-vibrant” ]Other Essentials[/texthighlight] ’ on the outside of this folder and add to it your cell phone bill, your gym membership statement, etc, etc. These are the bills that you have incurred but they are not necessary for survival.
Here are some simple folders to us. These were quickly available from my home office.
Oh BTW, did you notice the priority of these folders? Folder 1 contains all of your fixed essentials, basically the non-negotiables that you absolutely have to pay or there will be big consequences! Folder 2 contains the bills which are necessary for the comfort-level we Westerners have come to appreciate—the lights, the indoor plumbing, heat, etc. Folders 3 & 4 are usually contractual in nature and these are the expenses that ultimately we would like to do away with so that we will have more money to do the things that we absolutely love!
Take a moment to check your Mail Center. In my Dr. Phil voice, “How’s that working for you?” If it’s not working so well, take a few moments to make it the clutter-free zone that you deserve.
STEP 2: FITI–File It or Trash It!
Once your folders are labeled, take 1 piece of mail off of the pile at a time. Immediately trash all marketing rubbish. Then sort the remaining parcels by the Sender’s name. Once you have identified the suspects, begin to open each envelope and place them in order by the dates on each statement. If it’s the gas bill from last Thanksgiving, it’s probably safe to shred that one. Depending on the type of account, it is usually safe to trash it if the due date is more than 3 months old. Please use your best judgment and definitely keep all relevant pieces.
I hope that you have enjoyed this first installment. It’s pretty basic and that was intentional…usually the best systems are.
Our current mail center looks like this:
That’s it for now Nippy Nation…Happy Organizing!
[texthighlight color=”blue-vibrant” ]Alisa[/texthighlight]