Archive for ‘Financial Organizing’ Category
Spring is a great time to do financial spring cleaning, as you are getting ready for taxes, or just after you’ve filed. File tax support documents and completed taxes in a labelled folder, envelope, or box, and keep for seven years (or as your tax advisor recommends). After that time period, keep just the 1040′s, and then shred receipts and other bulky items.
If you need some motivation to get you started, check out classes like the Filing Freedom class from HeartWork Organizing.
Not feeling the paper? Organize with some pretty accessories. File folders are available in pretty colors, these days. It may seem frivolous, but if that’s what it takes, then go ahead and splurge!
Spring is also the season for community shredding events. Google your city or region + “shredding event” to find events near you. They are usually free or very low cost, and often shred your documents on the spot. I’ve published a handy list of Philly area shredding events for you here.
You don’t need to shred everything with your name and address on it, which are both easily gotten from a quick google search. Instead, be certain to shred anything with a financial account number showing, and recycle the rest.
Remember that you’ll want to keep more documentation if you take the home office deduction or run a business or independent consultancy from your home. Check with your tax advisor to be sure you are keeping enough data, and not too much. There’s good news in 2013 from the IRS about simplified filing for your home office tax deduction.
Most households have the equivalent of about two file drawers of historical paperwork. You might challenge yourself to see if you can get down to about that amount, and live within your filing space without taking over the dining room table.
If you are planning on going paperless with your finances, be sure to have a backup, and maybe back that up, too. An automated cloud service like Carbonite + an automated hard drive backup like Seagate is a powerful combination. Use the promo code “APPO” from me to get two free months of Carbonite backup service.
Many coupons expired at the end of last year, so coupon clippers can save a lot of space by starting over, or signing up for digital coupons from places like CouponCabin.com, or just looking for deals as needed on places like RetailMeNot.com.
Organize and slim down the collection of shoppers club cards by using the CardStar app to enter your shopper bar code into your smart phone or tablet.
Receipts for minor purchases that are not tax related can either be stored for one year in a box labelled current year (2013), or they can be scanned into an app like ShoeBoxed. Either way, they should come off the kitchen counter and desktop.
Many people are now reviewing only their online bank statements, but still receive paper statements that they never open. Make the call to cancel your paper statement if there is no other reason to archive them. If you still want to save a copy, file them in an email or document folder on your computer and take up no physical space at all. Beware, many banks only save the last 6-12 months of statements, so be sure to save an e-copy to your computer if you want to save them longer, and back that up. (see above)
Take 5 minutes to check your credit report at www.AnnualCreditReport.com. It actually takes 5 minutes, and is free once a year. If the information is correct, the is no need to print the report. If there are errors, which a recent report stated 40% of us have, you can take steps to correct them.
Want to be a financial organizing superhero? Take another 5 minutes to call your HR department and max out your 401K contributions, at least to your company match level, and maybe even to the pre-tax plan max which is usually higher. The company match means free money, so it’s definitely worth your 5 minutes.
What other Financial Spring Cleaning steps are you taking?
shredded paper photo credit www.123FR.com.
Is one of your New Years resolutions to get a better job, or any job at all?
This story is about Mandy, and she’s agreed to let me share her story. A while back, Mandy contacted me, asking for help organizing her thoughts. Not her stuff, her email, her finances, or her papers, even though we do all of that at HeartWork Organizing.
She was jobless at the time, but had a good education and professional experience in a well-paying industry. Even with her background, she had not worked in two years, and she felt defeated.
OK, stop right there. She has no job, no money, and she reaches out to a professional organizer? Is this what you would do?
Organize the Job Search
But Mandy knew that if she could tame her stuff and get her thoughts in order, if she could develop a daily routine and accountability to someone else, then she could move forward. In fact, the first thing that she did was agree to a payment and appointment schedule, and commit to sending me daily email updates on her progress with her homework. The first bit of homework she accomplished was to buy and start using a daily planner. She hadn’t had this much structure in quite a while.
We worked together to evaluate here current job goal to find employment overseas, and she decided that it wasn’t realistic, even though she speaks French. What she really wanted to do was stay in her field but make a big change, and work in a certain specialty of her field for which she had no real qualifications.
Don’t “Network”, Interview!
One of the most important- and effective- things she did is to conduct informational interviews. She researched companies she wanted to know more about and people she wanted to meet within those companies. She invited those people to have lunch or coffee with her, and she asked them, “How did you get to be so successful at what you do, and how can I do the same thing?”
Mandy sought out temporary jobs to improve her cash flow, which was good, because she was picking up more lunch tabs and she was meeting with more and more influential people, conducting more of these informational interviews.
In fact, she got so good at calling people she didn’t know and asking for advice, that she made the audacious call to a conference organizer to sponsor her to go to professional conferences so that she could meet even more successful people.
And here’s where it gets interesting…
I gave her an assignment to write a 500 word article on the first conference that she attended so that she could stay focused and get the most out of the conference. She posted the article to her LinkedIn profile, one thing led to another, and she received offers from journals in her industry who wanted her to write regular articles for their publication.
Her visibility improved on the Internet. She always had interesting conversation material because she was meeting with influential people in the region (no longer just in her field), and her confidence improved.
Put Yourself Out There
She went on an interview. She created a professional online profile on www.About.me, a free site. She went on another interview. She continued to write articles for the publications in her field. She started to have requests to connect on social media from people like university professors in her field who now regarded her as an expert in the field where she was not yet employed full time!
Throughout the months, Mandy continued to pick up supports like a job search group, a negotiating coach, even a professional photographer to help with her online profile, additional advice from her family, and all of her new networking contacts. She landed a couple of very attractive temp jobs, which gave her some wiggle room on her cash flow. Even without a new job, she began to exude that confidence that people have when they are busy, useful, and working on some exciting project. Her exciting project was, that’s right, her job hunt.
I’m leaving out a lot of interesting facts about Mandy’s job search, but the bottom line is that she started her new position last month, for a very well paying job in her chosen specialty. There are a lot of people who are proud of Mandy right now, but none more than herself.
It’s still the new year. It’s America Saves Week. And it’s the month to show the most important person in your life (you!) some love. Take a cue from Mandy, and focus in on the next right thing to change your life this year. You have my best wishes, and my help if you need it.
Copyright (c) 123RF Stock Photos
This 14 year old was $20,000 when we bought it new. We paid it off in 4 years and have had no bank payments on it for 10 years. We’ve had to put tires, belts, brakes, shocks, a muffler, batteries, CV joints, and even a new engine in it (the same year we moved). This year the gaskets were going, so that’s where the big bill came from.
But the car still looks great, has leather interior, has two airbags, and rides fine. It’s used for a very short daily commute, so it should hold up forever if we keep taking care of it. We thought about getting a new car when this latest repair bill came up, but here’s how that would break down:
|Annual costs||Current Car||New Car|
|car payments||$0||$4,572 or more|
|insurance costs||existing||additional $400|
We’re saving about $3,972 each year, even if we do have an occasional big repair bill. By the time we do get ready to trade this car in, it will be worth a couple thousand on trade in, and we will have saved enough to pay cash for the next car. As a bonus, we will have avoided the $2,400 in interest that we would have likely paid to finance the car for 60 months at 4.125% interest.
I realize that you might be reading this and hate your car. You might feel like you deserve a new car. You might feel like these numbers look good on paper but don’t hold up in real life (I assure you they do). You might feel like nobody but nobody does without a car payment. You might feel like you are too buried in debt to ever be able to get ahead and buy a car with cash. You might feel like a lease is a much better option (I assure you, it’s not). You might feel like it’s not worth it to pay off a car because by that time, they have big repair bills and it’s better to pay for a car payment at that point….Wait, that’s where we started.
I hope you are reading this while you are young. I hope that you have just a little bit of good luck to help you afford a nice car. And I hope this gives you a new lease on your ideas about cars and financial organizing.
How are you doing on organizing your finances? Do you have an emergency fund?
Yeah, you snort, that and a live-in butler. Wouldn’t both be nice?
Let me share a real-life story about how an emergency fund helped one person, and how you can get your own. If you read stories like this and think, this isn’t real life, let me tell you, this is very real life!
One of my organizing clients has been working on a few organizing goals for about the last year, while employed with a temp job. A few months ago, she got serious about paying down debts and stashing an emergency fund.
We agreed she should quickly stash $2,000 in an emergency fund. To do it, she re-allocated some extra money that she was sending to pay down a credit card account, she completely cut out spending $30 per week on clothes, and she paid more attention to her food and eating out expenses.
At first, she was worried that by diverting some of her cash into a savings account, she was hurting her other goal to pay down credit card debt. However, when I explained that the next “crisis” would cause her to rack up more credit card debt without having some cash in reserve, she got on board. Without a cash emergency fund, credit card debt will grow because there is no other alternative to tap when a crisis hits.
It only took her a matter of weeks to pad her hard-to-access savings account (not her regular savings account). Then, the inevitable happened; her car broke down. Here’s the email she sent to me:
“I have to tell you something. My car needs major repairs. It’s not driveable. If you hadn’t advised me to start an emergency fund several months ago, I would not have had the money to get the repairs done. At all. I am extremely disappointed that I have to use up at least $660 of the $1650 I have saved thus far, with great effort, but one thing I am not is panicked — thanks to you. This is exactly the type of emergency you wanted me to start the fund for, and your advice could not have been more timely.”
On the same day she sent this to me, I had just paid over $700 for four new tires. Yes, I used my credit card at the register, but I transferred the money from my emergency account over to my credit card account when I got home. Done. I’ve been doing this for well over a decade, and our emergency account covers these kinds of things, so financial snags aren’t really emergencies, they are just life events. I sleep a lot better now than I did in my twenties. Marketplace Money calls this the FU fund. Or the “See Ya” fund. Call it whatever you want, it is how you can get ahead, too.
To get your emergency account going, follow the same strategies that my client used:
1. Figure out if you can divert money from other obligations, like credit cards, just for a short time.
2. Find your splurges and halt them, just for a short time.
3. Part with anything valuable but unused, and sell it on CraigsList or similar. $50 here or there can be way more valuable than a dust-catcher lurking in your basement.
4. Take a part-time gig if needed. Tutor, mow lawns, whatever it takes to add a few bucks to your balance.
5. Monitor necessities. Cut back on groceries, cable, cell phone service, whatever else you might normally think is non negotiable, even just for two months. A little here or there can get you to your $2,000 faster.
6. Stash the money in a hard-to access account, like at an online-only bank or a credit union you don’t normally visit.
Once you have your emergency built up to $2,000, then start paying down credit card debt again. Once that’s paid off, then you can really grow your emergency fund to cover the recommended 3-9 months of living expenses, which can really come in handy. You see, my client lost her long-term temp job a couple of weeks ago, and she’s back to searching for full time employment. Uncomfortable? Yes. Crisis? No, thanks to an emergency fund that was waiting for life to happen.
If you love these ideas, please read more over at Dave Ramsey’s Financial Peace site.
all photos: Copyright (c) 123RF Stock Photos
HAPPY NEW YEAR!!!
But here is one thing you can do in three minutes or less that can make a real difference for you this year. Not kidding. Right now. Read this, and then run to find your nearest file folder, oversized envelope, or empty box. Yes, you can even repurpose a gift box if you need to.
Label this folder, oversized envelope, or gift box with a thick, dark marker: TAXES, 2011.
Set this folder, envelope, or box aside in your home office, or near where you process your mail. If you share your home, let your spouse know where this is and what it is for. Start filling it with items you might need to file your taxes this year. You’ll start gettting these items in mid-January, possibly through February. You might already have a few receipts or pages to add right now. But if not, you’ll find them over the next few weeks. When you find stuff that is or might be tax related, just pop it in here without worrying about organizing it. Get something in email that you might need? Save your sanity today by actually printing it out and popping it in the safe spot you just created. Do you run a small, disorganized business from home? Start pulling all of your records together now, and you’ll have what you need come crunch time.
Important tax records include W2′s, 1099′s, receipts for charitable gifts and donations, 529 records (contributions or expenses), end of year banking statements, refinance records, energy-saving home improvement records from the past year, and, of course, any unreimbursed work expenses. If you aren’t sure whether it might be tax-related, pull out last year’s (2010) tax return and use that as a guide.
Don’t organize this stuff until you get ready to prepare your taxes; you are weeks away from that. Right now, you are just trying to corral the little buggers that you’ll need for your 1040.
There. Done. You’re all organized, and it’s only day 2 of the new year. Good for you!
Copyright (c) <a href=’http://www.123rf.com’>123RF Stock Photos</a>