THE SCIENCE OF RECORD KEEPING AND MORE

boy building rocket

The silence of record keeping is that is not rocket science. People often   fail at record keeping because of 1 of 3 reasons.

1-   They never thought about record keeping as being important so never developed a system
2-   The system they decided on ( usually because some else told them) is so complicated they don't keep it up.
3-    They spend so much time keeping records that they don't spend any time reviewing them and using them to make decisions... the whole  reason to keep organized records in the first place.

One part of a record keeping system is an organized bill paying system 

 Your professor has  had the same  bill paying system for years.   Why? It's incredibly simple, wastes not much time, and everything is organized and easy to find. Plus I'm never late or forget a bill which would cost me money.  So what is   this  secret system?  Well, I'll tell you.   They key though is that this system works for me.
 

messy desk with bills

1- When bills or other financial information (statements etc)  first arrive I open them that day or the next and quickly review them (I do mean a brief look over ).   Sports on TV is always a good time (lots of commercials etc).  All, I am doing at this point is making sure that there is nothing unusual on them.

2- Once glanced at, I toss them into a cubby hole I have  in my home office.   But before I built that  I just tossed them into a box on my desk.  This is easier for me that receiving them electronically, but if that works for you just drag them in to an e-folder when received, so that they are in one place when you want to pay them and don't  they don't get lost  or  burred under other things    

phone screen shot reminders

3- Now here is where self discipline comes in.    No later than  the 5th and 20th of the month (earlier if the 5th/20th are  weekends) I pay my bills. I don't miss the dates but why not set your phone to remind you if needed.   I grab the ones I know i need to pay at that time and  enter them into bill pay.

save paper postage time

Bill pay makes it so simple because you set it up once and then make a quick entry when you pay the bill and your done.   Plus my  payments get there quicker and  I save on stamps and envelopes.  Plus my bank account balance is current  and I am  not surprised  by a check I've forgotten about.

 4  - Then 1 of 3 things happens to them.  If they are a statement... bank,  broker,  credit card etc  I file them in a big binder  for that year.    If they are a tax document or something I will use on my tax returns  i.e. receipt from charity I toss them in to a big envelope labeled taxes  ( after all I don't need to see them again until tax time).   If  I don't need to save it it gets shredded right then. I have  a good small shredder.  No shredder? toss into a big xerox  box and watch for free shred days.  Shredding is important.  It just helps protect your privacy.            

You may have the comment... My  bills don't come so neatly to be paid just twice a month.  Well there's a trick to that.  Call whom ever bills you,  and tell them what day you want the bill sent.  This works with credit card bills, and most others have a long enough grace period to fit into your  cycle cleanly.

email bill to computer

You may also have noticed that I  didn't talk about having bills automatically deducted from my bank account or charged to a credit card.  In some cases it makes sense to have automatic deduction.  OFTEN A HOME MORTGAGE OR CAR LOAN GIVES YOU A LOWER RATE WITH AUTOMATIC DEDUCTION.  THAT'S GREAT TAKE ADVANTAGE OF IT. !!!   However I don't like direct pay because then I don't pay attention to how big the bill is.  If you physically pay your cable and phone bill each month,  you may  decide to ask yourself if a better deal is out there.  Now in some cases there is no way around this Netflix etc.

credit card cartoon

 
If you have anything billed to a credit card be sure you pay the entire credit card bill fully each month.  If you don't things can end up costing close to double. We'll talk more about this in the course later.  If not go the debit or paper route  for bills. 

One thing i do  when I pay for things is to think about the records I will need for taxes.  For instance doctor's copay's are paid via debit or credit card. Why?  They show up on my bank statement.  Since I save the statements they are easy to  review at tax time and pull out anything information i might need.

I haven't talked about tying your  bill payment system together with your budging system but we are  taking small steps first.  Once bills are organized then you can match them to your budget.

Now my system may not work for you but having a system that does is key.   Again keep the system simple and make it one that works for you.

Will You Get Started Taking Charge of Your Finances?

The  above   BLOG Title  this week has two meanings

arrows pointing  up start small thing big

    Will you take action (get started) in this class? Odds are if you are reading this BLOG the answer is YES. The class may seem a little confusing at first but I suspect that by the end of next week you will find yourself in a pattern or routine that will allow for successful completion of the class this semester.

    Just, the goal of finishing the class with a good grade (although as an instructor I like this) however, is really not what will be of the most value to YOU in the long term. What will be the real value to you is learning how to and then taking action towards financial knowledge and improvement.

What’s on tap for this week?

There are 4 basic themes or modules this week.

    The Overall Financial Planning Cycle

    Beginning your Financial Mindset

    Goal Setting

    Getting Started ($5 per week)

1 – The Overall Financial Planning Cycle

financial planning process from text pg 16

The FP Cycle is about having a method to plan.  I  personally use the same method consistently.  It may seem hard to get started but once you do it gets easier every time.    Having a  Plan lets you see the bigger picture, how everything fits together. As you are completing various course elements over the next months you will see how they all fit together.   One thing to remember is that the cycle is continuous, stuff happens, plans need to be adaptable.  Everyone’s plans are different and they should be because we are at different stages  in our lives and different things are important to each of us.  

increasing bar chart with dollar signs

 

2 -Your  Personal Financial Mindset

A fundamental principle of Personal Finance is that a savings and investment plan starting earlier rather than later can get you ahead of the curve, The purpose of this class is to convince you that it really can work in the long term.  I always have believed this.  Once I started working I  began saving,  Over time I increased  my savings.  It really does work to save for the long term. Plus once you start developing your own personal financial mindset you find that you make  better informed decisions in every area  such as  buying  a car or  using your credit card.

 3 - Goal Setting

hockey player scoring goal

 For me the most important part of your week’s learning to be able to write a clear, measurable and attainable goal. Why? Because  goal writing has so many benefits for you and it’s not just about passing a Personal Finance class.

Odds are that at work, almost every one of you at some point will have your salary increases and perhaps a bonus tied to goal or MBO achievement. You  will want to be in control of your own destiny, with  goals evaluated objectively which reward you for your performance. You don’t want to worry about your review based on the mood of your Boss the day it’s written. Specific measurable goals not only leave no room for doubt, but allow you to double check along the way that you are “on target for success”.  Plus if you are behind in achieving your goal,  you become aware of this early, you know to  ask for help, and take corrective action to get back on track. Sure, goal setting and tracking take a little more time, but the benefits for you outweigh the small extra effort.   In my pre teaching life My employees all had SMART Goals.  This helped them maximize their bonuses and pay raises..

baby tree with coins

 4 - Getting Started ($5 per week)

 Typically the hardest thing to do is to get started. Like anything else once you get started things just become part of your daily routine. The $5 is meant to be a no brainier way to save money that’s painless and helps you to get started towards your savings plan.    For me  one thing I always do is ask for a discount. Between AAA,being a Teacher and AARP  many times there is one,  or even if it’s the  department store clerk finding a coupon to  scan for me.    

man with magnet attracting money

Personally I love to see everything you all post.  Every year students post an idea or two that I can use to save money!  Makes it worth teaching! (jk)     

Making "Cents" of Personal Finance

Making "Cents" of Personal Finance

printing money

When I began a class as a student I often wondered about the rationale behind the logistics of a class, in other words why is the instructor setting up or teaching the class in a certain way. As we begin this semester I will share with you the logic behind some of my decisions that impact the organization of Personal Finance Business130. Feel free to ask questions or post comments in the ask the instructor section in Blackboard.  You can comment here as well but this is not the official class site and there is no guarantee I  will read this promptly.  

1. Your personal financial data is personal.

locks

Assignments will require you to create, review and comment from a personal level about financial data. However you will never be required to share specific financial data. Anything posted in this class in a sense becomes public data. It has not happened yet, but if you feel uncomfortable with an assignment contact me immediately (early) via email and perhaps an equivalent assignment can be created where you feel comfortable. 

2. People learn best when they have a personal interest in the outcome.

You will notice that many of the assignments will ask you to review your personal information. For example when we review auto insurance I will be asking you to review your own auto insurance policy. You may not have you own auto insurance policy as you may be covered by your parents etc. If this is the case hopefully they can share their policy information with you, the assignment will be just as meaningful. As much a possible I try to make the assignments relevant to your personal financial situation. In a face to face class students learn best when they are willing to share information that reflects their own personal viewpoint. I encourage this via participation both in the face to face class and in your postings in the on-line class. 

3- You don’t need to be a math genius to pass this class... You don't ...I promise! 

teacher at blackboard

Sure most of the homework problems are numerical but I’ve tried to keep the math to a minimum. Spend your time focusing on the concepts and analysis not the mechanical calculations. If the math is causing you a problem post your questions in the discussion board early in the week so you can get help. Decimal points and percentages seem to be the largest issues in the past. If you need help in these areas get it from the college or a friend or arrange office hours with me to help. Or just try goggling math help example site.

 4 - Focus on learning not memorizing

You’ll do best in this class if you focus on learning and self-analysis of financial information as opposed to trying it memorize it. As you apply what you learn to your personal life you will see the benefits. Even for exams I work hard to stay away from rote memorization.

5- The Internet contains a wealth of Personal Finance Information.

           In fact sometimes it is overwhelming. During this course I hope you will develop a process or    method    you can use to find the information you need and then learn to apply it to your personal situation. The concept is to develop a method for lifelong learning  which you can apply when you need to make a financial decision in the future. Click to see an example

puppies holding a stick 

6- It really helps to share ideas about Personal Finance.

You will be sharing a lot in the discussion forums but in addition I will be asking you in some assignments to ask questions of or take surveys and compare results with friends or families. The more quality discussions you have about personal financial issues the more you will learn. Think now about who you may want to discuss things with. Don't be afraid to talk about financial information and decisions with friends and family. Their insight will help you learn and make better decisions.

7 Why must I pay for and use Aplia ??

This is a personal finance course and there is a quantitative (number) aspect to the course. By using Aplia the student gets an immediate response as to whether the problem has been answered correctly or not. It is this immediate feedback feature that I like for students. Remember if you have problems with the homework ask for help in the discussion board. If you try the problem and can't get the correct answer after reviewing the Aplia  hints  post your question in blackboard so others can help (including me).  Reminder you can try the homework 3 times  up to the 11pm deadline Sunday night.     But it  pays off to ask for help after  your first  or 2nd attempt  so you can go back and get the problem correct.   The goal is for you to succeed. 

person walking toward success

 8 What is Professor K's goal for this class?
If at the end of the semester you can say...I know I can a make better personal financial decisions  than  I did when the semester started then I'll think you had a successful class.  With any luck you you will save some money or invest a little better as well.  Enjoy the class.