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:

Tax Returns
-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)

Retirement Accounts

-Make sub-folders for each retirement account held by you and/or your partner (IRA, 401(k), etc)

Social Security

-Keep you most recent SS Benefits Statement in here

Investment Accounts

-Make sub-folders for each and every non-retirement investment account you have

Savings & Checking Accounts

-Self-explanatory. Make sub-folders for each account.

Household Accounts

-Make sub-folders for: House Title, Home Improvements, & Home Mortgage

Credit Cards

-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

Family Will/Trust

-Keep a copy of your most recent will in here, along with the business card of your attorney

Children's Accounts

-We don't have kids, so we felt fine about skipping this one

Financial Planning

-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.

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