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.