Clutter Reduction/Organization

Today's tip:

Organizing your Finances

In keeping with this week's project of financial organization, let's talk about the little things. Or, pennies, nickels and dimes add up to a lot more than small potatoes.

Okay, so I'm mixing metaphors, but I believe you get the idea.

Change Jars/Cashing in Change/Stray Pennies - A penny here, a nickel there. It's nothing, right? Well, yes and no. Once you start to look at the long term, you can see how it adds up. For example, let's say you lose an average of 3¢ per day. How do you lose it? I don't know. Perhaps you make slightly poor purchasing choices. Maybe there's a hole in your pocket. Maybe you throw out a part of something you bought. Perhaps you keep money in your pocket when it could be in your savings account, earning a little interest. Whatever the reason, you lose an average of 3¢ per day.

It's not a lot, right? It's less than a nickel! That can't be much, right? Well, after a decade, it's nearly $110! That's the cost of a bread machine, or about 1/3 - 1/2 of a new washing machine, or two nights out for two at a moderately-priced restaurant, etc. Suddenly, it's not such a little loss anymore.

Many people keep loose change. It's in jars, drawers, pockets, etc. And it sits there, and it doesn't earn any interest. And in the meantime, you spend other money and, of course, you bring back even more change, and add to the piles.

Some folks opt for those change machines in the supermarket. You know the ones - you throw a bunch of change in, and it spits out silver change or bills or, more likely, credit slips for the supermarket. But how is money made off these machines? It's made because they don't give you a 100% return. Usually, they take out something like 17¢ on the dollar. Let's say you do this once per week, and you cash in an average of $1.00 in coins every time. After a year, you've lost $8.84. And after a decade, well, you've lost enough to buy about 2/3 of a bread machine, or enough for a nice night out for two.

What are your options? One is to roll up the change once it reaches critical mass (e. g. the jar is full, the piles are toppling over, you're sick of looking at it) and cashing it in at the bank. Then, I highly recommend that you toss it into savings, as it's unexpected money. $20 here and there might not seem like much, but again, it adds up over time. Plus, you reduce clutter significantly.

Another option is to spend it. Here's one strategy (so that you're not paying a $200 grocery bill in nickels, thereby angering the people on line behind you). Every day, you spend money on things. Big things, small things, it doesn't matter. But you spend cash (not credit) on something, whether it's bus fare, tolls, breakfast, the newspaper, etc. And sometimes you get change back as pennies. To prevent this (and to get rid of pennies), take 20¢ in pennies with you every day. And when breakfast comes to $4.17, hand over 2¢ or 7¢, depending on how many pennies you have left. And when a quick purchase at the drug store comes to 22.81, hand over another penny. This takes time, but eventually you will deplete your stock of pennies.

As for silver change (dimes, nickels and quarters), it is more versatile, as you can use it for tolls and public transportation fare. Even if you have a transponder (a device used to get your through the exact change lanes on the highway. It works by sending a signal to a special tollbooth, and automatically deducts the toll from your account) and/or a monthly or weekly or annual public transportation pass, you will still need to hang onto at least a little silver change. After all, what happens when family or friends come to visit? They may not have passes or transponders. So divvy up some of the silver change into correct bus fare or tolls, and put it into labelled plastic bags. That way, when company comes, you can say, "Here's bus fare to the museum." or whatever and have it on hand. Otherwise, spend the silver change (generally a far easier thing to do than to spend pennies).

Coupons - Coupons can be the ultimate money-savers but they can also turn into money-wasters if you're not careful. This is because sometimes people buy stuff they don't want, like or need because they have a coupon. Silly, but it's true.

Keep coupons in a coupon holder (these are often available at the grocery store). If you can't find one, just staple together some envelopes. The envelopes should be categorized in a way that makes sense to you. Here's one way:
* Toiletries
* Pet Needs
* Other Nonfood
* Frozen
* Pasta and Sauce
* Beverages

Or, whatever works for you.

* Keep the coupons in the subcategories in date order. That way, when the coupons expire, you can just pull them out and throw them away.
* Make sure to put together your list and your coupons right before grocery shopping. But take the other coupons with you, as you may see something else you need.
* Get a store loyalty card and use it every time, as this often imparts more savings.
* Take one day per week (Sunday or Wednesday, usually) to clip coupons. Just set aside the time and do it. Only clip what you're going to use. If your family doesn't use Dove soap, for example, don't clip the Dove coupon, no matter how good it is.
* Check supermarket circulars (they usually come out on Wednesdays) for special sales or coupons. Sometimes the circular will have things like a coupon that will turn your coupons to double or even triple their value.
* Go to www.valupage.com and check their specials. Don't buy what you don't need, of course, but you might want to get sometime a week early if it's on special.

Let's say you save $10/week. That's actually a fairly modest goal, particularly if your store has a loyalty card and double coupons (this generally means you only need about $3 - $4 in coupons per week, which is often about 15 - 20 paper coupons). Most people shop about 50 times per year (weekly, but with 2 weeks on vacation). That's $500 in after-tax money! Essentially, the last 3 - 5 shopping trips for the year are free. For every additional $5 per week that you average in savings, you save $250 per year.

So long as they are limited to what you need, want and can use, coupons are more than worth the time it takes to clip, store and organize them.

What about special offers, rebates and the like? Then, use your judgment. It really depends on what the product is, the expiration date for the offer, and how much needs to be bought in order to get the rebate. For example, I recently sent in four UPC codes on bags of salad. In exchange, I'll get a coupon for a free bag of salad. We buy salad bags all the time, and we buy two each week. So, it only took me two weeks to accumulate what I needed, and we were buying the stuff anyway. Of course I had to mail everything in, which cost me 37¢. So my outlay was 37¢. In return, I'll get a coupon worth about $3.00. So, I'm getting a $2.63 return on my investment, or over seven times what I spent. That, of course, was more than worth it. Don't forget that appliances and computers and software often can generate rebates, and these are, naturally, for far more than $2.63. Check with the manufacturer or the store where you purchase these items.

Finally, I am not suggesting that you become a miser. If you want to put your spare change in a collection plate, or give it to your children, or help the homeless, then all of that is wonderful. Just don't forget that you have all of that change. Keeping it in jars isn't using it to its fullest potential. Whether you put it in savings, you spend it, or you give it away, you're making use of it - and that's ultimately what counts.

The kitchen

Today's tip:

Organizing your Finances

In keeping with this week's project of financial organization, let's talk about death, taxes and records retention. This blog shouldn't be used as a substitute for legal or tax advice. I'm just trying to impart a little common sense here.

Taxes - Unless you are able to use the 1040EZ or the 1040A form, taxes can be somewhat difficult. This is compounded by the fact that errors can cost a lot of money, either in the form of missed deduction opportunities or having to pay interest on late payments. This is why I strongly urge you to file your personal return (business returns should be prepared by a certified tax professional) online, even if you're not expecting a refund, as that will minimize errors. Reputable e-filing sites include the IRS itself and Quicken/TurboTax. I've used Quicken/TurboTax for three years now, and have been extremely satisfied with its security, accuracy, speed and thoroughness. I use regular old TurboTax (not the Premium version), which currently costs $42.90 for both Federal and State filings. One of the best things about Quicken/TurboTax is the ability to file at any time before April 15th, regardless of when the return is completed. So, I will generally gather all of my information and some strong coffee and set aside a day when I know I won't be bothered. Usually, that day is in February. Why February? Two reasons: (1) If it turns out I'm going to get a refund, then the sooner, the better, as the IRS will not pay interest on refunds they hold onto, plus the earlier you request a refund, the faster you get it and (2) This is about when I've gotten everything together, hence I want to file as soon as possible and not risk misplacing anything. Of course, if it turns out I am expecting to pay something, I will file later - but still fill everything out in February. Last year, for example, I received a refund on Federal, yet had to pay for State (it turned out more or less evenly). Therefore, I filled out everything in February and had TurboTax send in the Federal return asap. I received my refund and put it into my savings account so that it could earn a little interest. Meanwhile, I also asked TurboTax to file the State return in early April, and I paid the State return with my refund from the Federal return.

As for the materials you need to gather in order to pay your taxes, the following is probably not an all-inclusive list and definitely won't cover every situation. Therefore, consult either the IRS or a certified tax professional if you have questions. This list is also not intended to touch upon business situations.
* W-2 forms
* 1099 forms
* Bank statements showing totalled interest for the year, for checking and savings accounts
* Statements showing all dividends paid (even if reinvested) for stocks and bonds
* Statements showing all dividends paid (even if reinvested or redistributed) for mutual funds, IRAs and 401(k)s
* Documents from the sale or purchase of real estate, whether or not there's a house on the property
* Mortgage payment information for the year, showing points and interest paid
* Receipts or cancelled checks from charitable organizations for donations made during the year
* Statements from the Unemployment department for unemployment insurance paid during the year

I generally make a list in January of what I am expecting, and start checking it off as I receive the documents. Everything is placed into a file folder and consulted when I file the taxes online. And, once everything is done, I print out my online return and add it to the folder, which is marked with the year and put away.

Records Retention - According to the Internal Revenue Service, taxes should generally be kept for three years. See: http://www.irs.gov/pub/irs-news/at-02-06.pdf or look up 'record keeping' at the IRS site. Sometimes the rules change, so it is highly recommended that you take a look at the IRS rules prior to tossing anything away.

My father always holds onto old tax returns (plus all supporting documentation) for ten years. Then every year when he pays his taxes, he clears out the oldest set of records, tosses them away, and moves everything back in the filing cabinet. He's never been audited in the fifty or so years he's been paying taxes, so I use his method.

I also retain old checks, bank statements and charity receipts for the same amount of time, as they are often the basis for tax deductions and may be needed in case of an audit.

Another set of keepers is old insurance policies. I usually hold onto insurance policies until the Statute of Limitations has run (check with your local government or Bar Association as these are different in every state) for any possible claims, such as a slip and fall on my homeowners' insurance or an automobile accident on my car insurance.

Death - Of course I don't mean organizing death per se (as if that were possible!). Rather, I am speaking about getting your affairs in order. Naturally, this task can be accomplished even if you are young and healthy.

The question of whether to have a will is a personal one, but usually a will is a good idea if you have a home or minor children or some sort of complex financial situation. Personally, I am big on having an attorney draft a will (even a fairly simple one), mainly because the chance of errors is considerably smaller, and because I personally believe that a professional should be consulted for something so important. The other reason is because, frankly, I'm unsure about the reliability of the sites/software which promise a legal will. But if you want to go that route, of course I won't stop you.

The main idea is to assure that your family understands your wishes and won't have to make any educated guesses about them, either after you're gone or if you're too incapacitated to have a say in the matter.

Therefore, in addition to a will, you'll need to make decision on things like:
* whether you'd want to be kept alive if brain-dead. And, if so, whether you agree to a feeding tube, if necessary. The best way to make your wishes known is with what's called a Living Will. There are several sites regarding this. Again, you may want an attorney to assist you so that everything is perfectly clear, and all contingencies are addressed. However, a lot of people do these on their own. Here is one site: http://www.uslivingwillregistry.com/ I make no warranties or promises as to the quality of this site as there are many others and this act can be somewhat fraught with problems. Caveat emptor.
* whether you want to be an organ donor (usually this is a form on the back of your drivers' license) and, if so, whether you want to put any restrictions on any donation(s)
* where you'd like to be buried. One true kindness you can perform for your loved ones is to select a plot, a funeral home, a coffin, the plot's care level (perpetual care is usually cheapest in the long run) and anything else needed -- and then pay for them in advance.
* who will administer your estate. This should be specified in the will. If you don't have a will, you'll need to make this clear to your loved ones. Do this in writing to avoid confusion.
* whether you want any special considerations such as cremation (and then, where would you like your ashes to be spread?), a wake, cryogenic freezing, something read at the service, etc.
* who you'd like to care for your children and/or pets after you're gone. Of course, discuss this matter with these people, first.

Finally, you can avoid a lot of heartache and problems if you simply take care of a lot of things in advance. A few things that can be done are to
* give away many of your assets to your heirs before you die. This way, they won't be subject to estate taxes. There is a limit to giving for any particular year. It is currently $10,000 per person but invariably this will change. Check with the Internal Revenue Service.
* put money into life insurance or trusts for your family. These will generally pass straight to the beneficiaries without going through probate, and estate taxes will be avoided. Ask your insurance agent and/or bank for details.
* put safety deposit boxes in your name and in the name of a trusted heir, as joint tenants. This way, when you pass on, the heir can open the safety deposit box without a court order.

While no one can prevent death, you can ease your loved ones' pain considerably by being considerate of their situation after you are gone.

Dusting

Today's tip:

Organizing your Finances

In keeping with this week's project of financial organization, let's talk about your checkbook. And, while we're at it, let's add in your savings passbook (or the equivalent), plus any and all financial statements you get during the course of a given year.

Keeping everything straight can be daunting, particularly if you have held a kind of anything goes attitude until now. Here are a few tips for keeping on top of things.
* Get Quicken. Yes, they have competitors (Peachtree Software is one), but Quicken holds, by far, the majority of the market share for personal financial software. There's a reason why: they're that good. Now, find either your old bank statements or your old check registers (both, if you have them), and start entering historic data. You only need to go as far back as you wish, and of course that could be yesterday, but bear with me on this. The more historical data you have, the better you'll be able to tell if your expenses have gone up or down, or if your spending habits have changed. However, keep similar data together. E. g. you need not go back to your infancy. Personally, I have cut off our archives to the day we moved into the house, as the difference between rent and mortgage (plus all of the other expenses that a house entails) is so great that it would be apples to oranges. But, for us, June of 1995 through the present is a fair assessment of our financial situation. Keep Quicken backed up, either on a diskette, rewritable CD-Rom or Zip drive. I use a Zip drive since we have over seven years' worth of data stored.
* Keep a checkbook anyway, and always keep it balanced. You need this as a backup to Quicken and as a way to have this information at your fingertips when you're at work or on vacation or otherwise away from your PC. Keep a calculator near your checkbook and keep track of your balances.
* If you're doing online banking (yesterday's tip), check your balance online, to be sure that nothing is being charged to you that isn't supposed to be. This will also give you an idea of what's been cashed already, e. g. your real balance. Of course I'm not suggesting spending money you don't have, but if you're about to be overdrawn, a quick check of this will reveal that fact so that you can take action before bouncing checks or being hit with a fee for using overdraft protection.
* Transfer your credit cards to the card with the lowest interest rate. Or, better yet, cut up all of your credit cards and go with a debit card. Why a debit card? By using a debit card instead of a credit card (and ours say Visa on them, anyway), we don't have any credit card bills/statements whatsoever. Everything is taken directly out of checking, so we live within our means. And, since it's the same as a check, we don't carry checkbooks around. In fact, between the debit card and online banking, we've used fewer than 800 checks in the past seven years. The debit card's statement is integrated with the bank statement so that we only look at one piece of paper instead of several.
* Input and keep track of your securities (stocks, mutual funds, etc.) at a free online service such as MSN or The Motley Fool. Personally, I prefer the Fool as it seems to be more complete, but either is fine. I believe that Yahoo also has a securities tracker. Whichever way you go, input your information and then be sure to keep up every time there's a stock split or dividend reinvestment, or if you buy or sell anything. I tend to stack the statements up and enter everything either once per month or once per quarter since I am in a more or less 'buy and hold' strategy. Therefore, there isn't a great deal of day-to-day activity in my portfolio and this is a fairly quick task. I also keep track of 401(k)s, IRAs and mutual funds on Quicken. Hence, I can see daily activity on the Fool and monthly or quarterly activity (depending upon how frequently I get a statement) on Quicken.
* Keep savings account information on Quicken, and check every month online for interest information.
* Retain all ATM slips, register receipts and credit card receipts until the monthly statement comes in, and they clear. There may be some slips you want to retain past that, e. g. they may contain warranty information or you may need them for your taxes. Anything else, so long as it has cleared, can be discarded. We use a very simple procedure. We enter the information in the checkbook and place a checkmark in the upper right corner. Then we enter it into Quicken and write a Q next to the checkmark. We then keep the duly entered slip in a large paper clip. When reconciliation time comes around, we grab the clip, open up Quicken and match slips to checkbook to Quicken to statement.
* Quicken has a reconciliation feature for when your statement comes in. If you're constantly reconciling the balance at the end (e. g. you didn't keep track of everything), review your methodology. Are there entries that were made too quickly, so that there were typographical errors? Were automatic payments forgotten? Were slips lost and never entered? If it's typos, be sure to enter the data more slowly and carefully. If automatic payments have been forgotten, you might want to write a note to yourself and post it where you can see it. If slips are getting lost, you will need to be more careful. After all, a moment's carelessness can cost you, in terms of bounced checks, etc.

Above all, while this may seem daunting, it becomes easier the longer you do it, and it doesn't take too long every month. And, the savings are definitely there, in terms of being able to prevent incorrect charges or overdrafts.

Bathrooms

Today's tip:

Organizing your Finances

In keeping with this week's project of financial organization, let's talk about bill payments. Everyone does them, and they can get expensive and time-consuming. After all, at minimum, how many bills does one pay in any given month?
* Mortgage or rent
* Homeowners' or renters' insurance
* Car payments (many cars are paid off, of course)
* Automotive insurance
* Electricity
* Gas (some folks don't have this utility)
* Local phone
* Long distance
* Cable
* ISP (we have a cable modem, so this is incorporated within the cable bill)
* Water (usually not a concern if you rent)
* Condo fees (for some)
* Credit cards (the average American household has thousands of dollars in debts)
* Newspapers or magazines (our deliveries are paid on a quarterly basis for one newspaper, but monthly for the other)

Whew! And, of course, you're also shelling out 37¢ per mailed bill. Let's assume one credit card, along with all of these bills. That's $5.18/month just for postage! This works out to $62.16 per year. You could have a very nice dinner for two on that, with money left over for parking or a half a tank of gas.

In short, it costs money to pay bills the old-fashioned way.

Look into your bank's online payment system, if any. If they don't have one, then shop around town. There are also some sites on the Internet, such as Paypal. Here are some questions you want to ask:
* How much does it cost per month? Can you get a discount for paying for some months in advance? Remember, if it's less than $50/year, it's worth it in terms of postage charges.
* Do you need to keep a minimum balance for it to be free? If so, what's the balance needed, and what can be included in said balance? E. g. our bank allows $10,000 of our mortgage to count as a part of the $25,000 minimum balance needed, plus they include any mutual funds or IRAs purchased through them. Given all of the things that can be taken together, we make the $25,000 minimum balance readily, even though we certainly couldn't put our hands on $25,000 that easily.
* Does the service permit regular timed payments? E. g. your car payment probably doesn't change from month to month. Can you have the service automatically make that payment?
* Can you decide when bills are to be paid? E. g. if you enter the data on the first of the month, can you schedule for the bill to be paid on the tenth, or will it be paid on the first whether you want it to be or not?
* If you have fewer bills to pay, can you get a pay-as-you-go or reduced rate?
* How are bills paid if you don't have enough money in your checking account? Will you be warned if you're about to overdraw your account?
* How often does the service miss a payment (my bank {Fleet} has, in the past six years, missed about two payments on my account. I have no idea whether this is typical.)?
* Can you keep track, online, of payments that have been made?
* Can you load frequently-used data, such as account numbers?
* Can you download payment information to a program such as Quicken?

Ever since switching to online bill payments, we've paid everything except for our mortgage (because we need to enclose a coupon). We hardly ever buy stamps, and it isn't a tragedy when we don't, until the mortgage is due. And there's been another benefit - we've never been late with a bill. Ever. This can make a huge difference in terms of interest paid when you are carrying a lot of credit card debt.

Trash day/Outdoor work

Today's tip:

While this site is set up to cover specific tasks on specific days, the fact of the matter is that sometimes you finish early. And, on other days, you finish late or not at all or you just have to get something done, even though it's the "wrong" day.

I've also, frankly, been a little concerned that this site is called Get it Clean - Get it Organized! yet only one day per week has been devoted to organization. I'd like to allot more time to getting things organized, as cleaning tasks tend to get faster as you get into a groove and find your own shortcuts. But organization can go on any day. It's hard to find a home that's so completely organized that there's absolutely nothing to do. Hence, from now on, unless there's a very specific kind of cleaning tip, I'll be devoting this site to organizational tips (of course, you should continue to keep things clean, so the same headers will continue to appear every day). I'll try to put thigns together in a logical sequence. Therefore, this week, we'll tackle financial organization.

Organizing your Finances

You may think that the only people who are truly financially organized are the very rich (since they pay someone to do this for them) or the very poor (since they have very little). The truth is that anyone can be financially organized. It is also true that you'll be more likely to hold onto more of your money and possessions if you get and stay organized.

The first step is, quite literally, to be able to find everything. And there's no better way to start going down that road than to rent a safety deposit box.

My husband and I rent a fairly small (it's about the size of a shoebox, but it's a lot longer) safe deposit box from our bank. The cost is $45/year, but of course your price will vary, depending upon your location, the bank's rates and the size of the box. We also have it set up so that the bank just removes the $45 every year in a checking account deduction. That way, no one needs to remember to pay the box rental fee.

Here's what we have in ours:
* Deed to the house
* Title to the car
* Jewelry I rarely wear
* Stock certificates
* US Savings Bonds, awaiting maturity
* Bank statements (fairly recent) from all of our accounts
* Our birth certificates
* Insurance policies
* 401(k) and pension statements
* A list of everything in the box

If we had a will, we would put that in there as well. We don't keep passports in there, although we could. If we had children, we would keep their birth certificates and bonds in there, and if we owned things like undeveloped land we would keep the deeds in there.

There are several advantages to this system:
* We can always find these things
* By keeping valuables offsite, our homeowners' insurance rate is lower
* In case of fire, we have all of these items and don't need to hunt around for them. When we really need cash or perhaps jewelry to sell, we have it. And we have proof of insurance, in case of burglary or fire
* We keep an identical list of the contents at home, so we can choose what to take out. This list also contains things like the bond maturity dates, so we're only cashing in bonds that have fully matured

Even if you believe you don't have a lot of important papers, you probably have some, such as bank statements, insurance policies and a lease. Plus, you may get more as you get older. And, you can't beat the convenience of being able to find everything.

Oh, and another thing - our bank is open Saturday mornings, so we can go to the box and take things out as needed. Stuff doesn't just go into a black hole, never to be seen again. So shop around and look for a convenient, inexpensive safety deposit box.