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Benefits of a Filing System
by: Joyce Moseley Pierce
With a new year comes the reality that April 15th is just around the
corner! It seems that the process of gathering information for preparing taxes
is almost as painful as writing that check to the IRS! However, if you have an
effective filing system the process it may not hurt quite as much, and it will
certainly help cut down on the time spent searching for receipts if you are
currently throwing everything in a drawer.
Years ago we invested in a 4-drawer file cabinet. You may not need that
much space, but whatever you use, even if it's a cardboard box, think about
purchasing manila folders to create a file for each category. Set your files up
in a way that makes sense to you. My file drawer includes files for homeowners
insurance, health insurance, life insurance, Visa, American Express, Bank of
America (for checking), Ameritrade, Yukon XL, Honda Pilot, medical,
travel programs, contributions,
utilities, receipts, and home. If you receive monthly statements or write
checks to them, you probably need a folder.
I use a hanging file folder just so the manila folders don't get lost in the
bottom of the drawer, but then I also keep a manila folder inside each hanging
folder. When the end of the year approaches, I simply pull the old manila folder
out of the hanging folder and replace it with a new manila folder that is
marked with the new year. For instance, I will replace my "Visa 2006" folder
with a new one that says, "Visa 2007."
I will put all of the 2006 files in a cardboard banker's box
with a lid, and will also create a new manila file to go in that box that says,
"Income Taxes 2006." In that file I will place statements and information that
will be necessary for claiming deductions on my tax return. It helps keep me
from scrambling at the last minute to find the mortgage statement and W2s.
In addition to these "removable files" that are designated by the year, I have
files that will remain in my cabinet until I no longer own that item. For
instance, this past year we gave one of our cars to our daughter. All I
needed to do was grab the "Ford Explorer" file and hand it to
her with the keys. That folder contains every invoice for every repair made
to that car in the past 10 years. I learned years ago that it's important to
track even the oil changes in case you have a problem that might be covered by
the warranty. The manufacturer will require proof that you have maintained your
car properly before they will honor the warranty. And, in my case, it is also helpful
to the new car owner. The file for "home" contains service
policies, receipts for the new air conditioner we had to put in this summer, and
anything relevant to operating our home. In fact, in the hanging folder for
"Home" contains several folders that separate this information.
If you don't have a serious filing system, now is the perfect time to start one
for 2007. Once you set up the system and start using it, you will see the
benefits of having your paperwork organized. It feels good to be able to locate
a receipt when you need it and may actually help you save money by being able to
provide proof of purchase.
Copyright 2007 Joyce Moseley Pierce
Joyce is a freelance writer and owner of Emerson Publications. She's a contributing author to the Chicken Soup for the Soul series. Visit www.emersonpublications.com for information that is pertinent to today's families.