Friday, May 28, 2010
Keeping Your Financial Life Organized
Matt and I have been reading this book lately. Now, David Bach is kind of a cheesy guy, but he does explain complicated financial concepts simply and present a well-reasoned approach to using the money you make to live the life you want. Plus, he is an Incredibly Encouraging writer...seriously, that guy could motivate a pig to fly.
One thing we really liked was his section on how to organize all of your money-related files. This particularly hit home because one of us (achem, Jessica) had some trouble finding last year's tax returns when we were applying for our mortgage.
The scheme involves having big files with a variety of sub-files, and goes something like this:
-8 sub-folders (one for each of the last 7 years, one for the current year)
(do 7 years because that is the duration the IRS can examine when they audit you)
-Make sub-folders for each retirement account held by you and/or your partner (IRA, 401(k), etc)
-Keep you most recent SS Benefits Statement in here
-Make sub-folders for each and every non-retirement investment account you have
Savings & Checking Accounts
-Self-explanatory. Make sub-folders for each account.
-Make sub-folders for: House Title, Home Improvements, & Home Mortgage
-You got it...sub-folder for each card with monthly statements and card terms/benefits
Other Liabilities (i.e. STUDENT LOANS, car loans, etc)
-This is a doozy for us -- keep a folder with info on each loan, repayment terms, payment verification, etc
-Make sub-folders for: Homeowners/Renters, Health, Life, Car, Disability, etc
-Keep a copy of your most recent will in here, along with the business card of your attorney
-We don't have kids, so we felt fine about skipping this one
-Ever met with a financial planner? Done home/online financial planning? Put that in here.
Matt and I work hard for our money (these days, who doesn't), and we want to be smart about how we save (and spend)...staying organized gives us the tools to make smart money decisions.