Financial Sanity

Desk

The first thing you need to do before getting your finances under control is to have a desk or someplace to do paperwork. In a cubbyhole in my desk I have a bill paying tray. It includes the bills, checkbook, stamps, address labels, envelopes, a calculator and a notebook to write when the bills are due. Make yourself a bill-paying area.

Bills

Find a way to keep track of when bills are due. Near the first of the month I look over last month's page to make sure everything was paid. Then I write the 4 or 5 fridays of this month down on the next page of the notebook. Next to the date I write which bills will get paid, going by last months dates. Other people use a calendar to track the dates. Some people pay the bill right away and just put the date to send on the envelope where the stamp will be.

Daily, when the mail comes in, check for any bills. Open them up, throwing out the outside envelope. If the bill is not in my notebook I add it. But, most of my bills are already in the notebook. Then the bill goes into your bill-paying station. Some people have their bills in a to pay file folder, a wooden wall mail holder, or a basket. Use what feels comfortable for you..

Now it's time to pay bills. I do mine every Friday, other people prefer once or twice a month. I usually try to have some music on for this tedious chore. I use the program Quicken to track my checkbook. So before I pay bills, I type in this week's transactions.

Most of my bills I pay online. During the past couple years, most companies have sent information on how you can pay your bill online. You no longer get paper statements, instead you are e-mailed when your bill can be viewed online. The money is taken straight from your checking account. No stamps. No lost mail. You can also use online banking if your bank offers it. But, usually there is an extra charge.

After I pay my bills, I put the other half of the bill into an accordian file under each month. Other people separate their bills by utilities, credit cards, etc. Most don't need to be saved, except for tax purposes.

Balancing Checkbook

Every month within a couple of days of getting your checking statement, balance the checkbook. If you wait, balancing the checkbook is more difficult. I use Quicken to make it easier. If you are unsure about how to balance a checkbook here is a tutorial

Receipts

To organize receipts for things you have purchased, get a 3-ring binder. In it include sections such as: computer receipts, electronics, small appliances, large appliances and furniture. Place each receipt in a plastic sheet protector along with the warranty and manual. That way you have the receipts in case anything breaks and you want to use the warranty.

Debt Reduction

If you are in debt, Quicken has a debt reduction planner on its site. It will help you find out the quickest way to get out of debt for the least amount of money. Usually the best way is to pay the minumum on all your credit cards except one-either the one with the largest interest rate or the smallest debt. Pay as much as you can on that one. Once that one is paid off you add what you were paying to another debt on your list. That one can get paid off even faster. When that debt is paid you add what you were paying for that debt to the next debt and so on. For example:
You owe:
$300 to Circuit City
$1000 to Best Buy
$3000 to Citibank
$5,000 Car Loan

You can pay $600 per month to reduce your debt. So, The first month you pay $300 to Circuit City, the minimum of $30 to Best Buy, the min of $80 to Citibank and the min. of $190 on your car loan.

The next month Circuit City is paid off so you pay $330 to Best Buy and the minimim on the rest. And so on.

One way to stay out of debt for a car is after you have paid off your automobile continue to put the amount of your car loan into savings. That way when you need a new car you can buy one without another car loan.

Savings

You also need a savings account. You should put at least 10% of your money into savings. If you can't put 10% away, then see where you can cut expenses or raise money. Start saving your change and forgoing the expensive coffee. It has been suggested that we need to have in the bank enough money to cover 3-6 months worth of expenses, just in case.

Household Inventory

Make sure you have a household inventory sheet. It doesn't seem urgent at the moment to do it (you wouldn't believe how long I procrastinated) but you never know when you may need it. My insurance company gave us a pamphlet with space to put each item in each room along with the date purchased, purchase price, and serial number if applicable. Every January you will want to go through your house again or just mark things down as you buy.

 Suze Orman has loads of resources for when you are ready to go deeper into financial learning. Learn about retirement planning, wills, stocks, mutual funds and more.

You can get your finances in order this year. Think positively!

 

Back to Financial Articles

Beth Dargis helps the overwhelmed to create saner, simpler lives. For free monthly Simple Self Care Calendar and Weekly Simplicity Tips visit: http://www.encouragingcoach.com. This article is Copyright © 2005 by Beth Dargis, Zeeland MI. To send feedback or request reprint permission (usually granted free of charge), please contact .