Create a designated time to process all mail, and record your incoming bills. Being consistent in dedicating this time aids in establishing a habit that will assist you through out the year.
When opening your bills,
* immediately toss any extra inserts
* place the bill in its return envelope
* stamp it
* place your return address on it at the same time.
* place the bill in an appropriate "holding area" for your next scheduled bill paying session. (10 minutes max. with this system)
If you pay bills manually invest in a "record" book. I recommend a high quality book due to the fact that the system I am about to teach you requires a binder that is quite durable.
I devised this system more than 25 years ago and have since taught it to hundreds of clients who consistently struggled with finding a manual system that would be:
* easy to follow
* allow them an area to contain their bills
* provide a tracking system of what was paid to who, when and how much.
The record book I recommend most often is called the "Boorum & Pease Account Book." It is ruled and contains either 150 or 300 pages depending on the clients needs.
The code number is: 67 1/8-150-R or 67 1/8-300-R respectively. These record books may be special ordered at most local office supply stores.
The Record Book System:
Create a bill paying schedule for the entire year -- all at one sitting. This will take about 60 minutes.
Flip to the second page of the record book. (this will provide a full page on the left and a full page on the right)
The left side of your record book is used for logging income, commissions,dividends etc... Depending on your payroll schedule this would be weekly, bimonthly or monthly.
The right hand side of each page is used for tracking all bills.
Starting with the second right hand page, write "January" on the top line. Turn the page and on the right hand side again, write "February." Continue flipping through pages and enter each month for the entire year.
Remember: write only on the right hand side of each page as you flip through the record book.
Now under each corresponding month start logging all the categories that you pay on a regular monthly basis, beginning with January.
To the right of each entry, fill in any amounts that you know are "standard" payments. For example rent/mortgage, car payments, some insurance, motor vehicle registration, safety inspections etc...
To the left of the item you will notice that there is a .25 inch block. In this area log the "due date" for this entry. Once again, many entries will have repetitive dates.
* insurance: medical, life, home and car
* all credit card companies
* long distance carrier
* cell phone carrier
* car payments
* LAN carrier
* loan payments
* even tax schedules
Other items to log:
Refer to your license, auto safety/emissions sticker and registration for the expiration dates.
Log each of theses items in the according month. There will be no surprises or missed dates.
If you pay insurance quarterly, fill it in immediately.
As you receive your bills in the mail, fill in the amount due and the due date.
Record the date you actually make the payment to the extreme left hand column preceding the column designating the due date.
Record the check number and amount paid to the far right hand side. You now have a self contained area that houses all pertinent data that you could possibly need for any situation that would occur. This will cut tremendous amounts of time on future research if a bill is ever questioned. You have also created an excellent tracking device that will eliminate pulling out any old receipts, statements or billings when it comes time to calculate tax information.
For this system to work -- you must record any and all payments made during the year in a diligent fashion.
Be sure to log any expenses you incur during the course of the month. Because ALL expenses and receipts have been logged... technically all data can be stored in a box for the year. There is no need to create separate file systems for household receipts.
All data is self-contained in your log book when it comes time for tax preparation.
At the end of the year move the receipts to manila envelopes and file in an archive box with the rest of your tax records.
I would advise creating files for credit card statements, trust funds, income investment, and bank statements.
Tracking Credit Cards:
Keep all receipts for credit card purchases during the course of any given month.When the bill comes in, cross-reference all charges with the purchases from your bill.
Credit card companies make mistakes too. It is wise to review your bill each month instead of assuming all payments have been received, purchases are correct and credits have been applied.
You can now track any "questionable" charges, as well as have an accurate and organized system to insure credit on returned items.
Always date your check registers in big bold numbers on the outside of the book denoting the range of dates it includes. This aids in quickly retrieving the appropriate register.
Make sure you change registers on December 31st of each year regardless of how many pages are left. This will help you in filing with the appropriate tax records.
NEVER write on every line in a check register. The top line of each block needs to contain "who". The shaded line underneath can contain a short description of the purchase or reason for the check. This will allow you to visually read each check with greater ease, as well as providing ample room for the necessary calculation.
Always reconcile your check book. Don't leave your balance up to an ATM balance update key.
Note: Make sure you enter any ATM and/or service fees on a regular basis. Apply for "safe keeping" or microfiche service at your local bank or find a bank that supplies this benefit. You will save a great deal of space on filing, and normally there is no charge if your request a photocopy of a canceled check.
If you do elect to hold all of your canceled checks, take the time each month to place them in an ascending order in the original box that the checks were received in. This makes quick reference to the needed check a snap. Avoid using manila envelopes for storing items in a filing cabinet, except in the case of maintaining past tax records. A manila envelope for any other reason means "out of sight out of mind" which equals wasted space. When storing tax information place all records in a large manila envelope. This includes: credit card billings, receipts, check registers, bills and any other documentation used in calculating you deductions. A copy of your tax forms also needs to be included.
Date the outside of the envelope and file towards the back of one of the filing drawers or use a bankers box.
In keeping several years for archive purposes, this means the oldest year will always be in front.
At the end of each new tax year just toss the entire envelope in front. (after you have the suggested amount of years on record as designated by your CPA or Tax Attorney).
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