4 Simple Steps to Organizing Your Financial Life
by Karina Gafford
MilitaryByOwner staff writer
Did your mom, dad or teacher constantly nag you about missing homework assignments, projects that seemingly disappeared into never-never-land, finding crumpled permission slips amid the abyss of scraps of paperwork, gym clothes, and perhaps a moldy, long-forgotten cheese sandwich or two in your backpack? If you were that kid, chances are that as an adult, you now cannot remember your dry cleaning or just where you may have put your car keys or your phone either. Not everyone has an inherent ability to organize; some must learn the skill. No one will (or should not, anyway) nag you about the location of your recent retirement statement or pay stub. Keeping that paperwork organized, however, just may help save you from stresses such as missing a deadline for locking in a great interest rate or showing a buyer that, despite requiring a mortgage, you are financially strong enough to compete with a cash buyer for the home of your dreams!
Anyone who has either begun or successfully completed a home loan process has experienced frustration at various stages along the way whether it involved waiting for the underwriter to provide credit approval or for the appraiser to provide the value of the home necessary to secure the loan. Gathering the requisite paperwork, however, need not add to the stress of the home loan process, and yet so many find this aspect particularly challenging. Those with high executive functioning skills easily manage their paperwork by organizing items in a system that works best for them; whereas, learning and implementing a simple system may be necessary for everyone else who finds organizational skills somewhat more challenging. As an academic coach who has trained countless students on organizational skills, I can attest that no single solution to organization exists and no fancy mobile application will magically organize your life regardless of what their fabulous marketing may advertise. Instead, identifying, implementing, and sticking to one system consistently shows the most effective long-term results in improving one’s ability to remain organized.
For military families on the move, a portable filing system serves as the simplest way to remain organized for the duration of the servicemember’s career, regardless of whether that career lasts 4, 10, 20, or 30 years and beyond. While I did mention that no single system exists to miraculously transform chaos into order, here are some simple steps for to begin to develop a system that will work best for you. Steps one through three involve the creation of an annual filing system; whereas, step four shows you how maintain your system year after year.
1) Set-up a pocket file holder...
This pocket-file holder is the key to your system, so it must be highly visible, eminently accessible, and used only for the stated purpose of each file. A hanging wall system with multiple pockets for files, such as the 7-Pocket File System at Staples provides easy access to files while remain up on the wall and out of the way. A pocket file system need not cost anything, though, as many examples on Pinterest and HGTV show that a plastic dish drainer can easily repurpose as a great tool for holding files.
2) Purchase manila files for organizing your paperwork...
These files will organize your paperwork. Manila files also need not be expensive, as a box of 80 plain files at OfficeMax costs only $5. Eighty files would supply a sufficient amount to organize your files for years to come! Colored folders, such as the 6-pack of pastels from Martha Stewart will cost quite a bit more, but an attractive looking office space can help motivate a desire to maintain a clean space.
3) Label each file...
Generally, military families will have similar labels, but these will not work for everyone. This list should serve as a good place to start:
"Pay Day" – Print out a copy of your Leave & Earning Statement (LES) either bi-weekly or once a month. Also, if either you or your spouse earns additional income through employment, make sure to include those, too. Always put the newest pay day statement at the front of each file, so that your most recent statements remain easily accessible.
"Housing"—If you pay rent, put your annual lease in here, so that if you need to check whether you can have a guest stay for a month or whether you or your landlord are responsible for a maintenance issue, the information is easily accessible. If you pay a mortgage, then likely you will receive a monthly, quarterly, or annual statement (if not all of the above) to include. You will also receive tax paperwork from your mortgage company as well as your local housing authority, and all of this paperwork should also go into this file.
"Utilities"—In this pocket, you may wish to have several separate files, depending on how many utilities you pay. For instance, you may have a file each for electricity, water, gas, sewage, trash, television, internet, and cellphone. Television, internet, and cellphones do not necessarily qualify as utilities, but they are monthly recurring bills that do serve a utility purpose, so this is a good place to keep them organized. Make sure to label each file, and again, just as with the "Pay Day" file, put the most recent statement toward the front. If you had to address any item on your statement with the company in question, add a sticky note to the front before you put it into your file to remind you to check if the issue was resolved when you receive your next statement. You will easily notice the sticky note since the previous month’s statement will be at the front of the file. For utilities requiring deposits, such as a water bill, I suggest writing the deposit amount inside the file along with whether the deposit is refundable. For contract items, such as a cellphone, write down the contract start and end dates.
"Rental"—Many military families have a second home at either their home of record or a previous duty assignment that they now rent out. It is important to keep these files accurate not only for tax purposes, but also for keeping track of expenses, maintenance issues, and contact information for property managers and tenants. Within your pocket, your files may include one for a property management statement, an annual HOA statement, a copy of the current lease agreement on the property, contact information for your preferred local contractors, as well as a housing file for any mortgage and tax information that you may receive.
"Pets"—Maintaining easy access to your pet’s records will not help you prepare for a home loan, but keeping your pets most recent shot records readily available will save you endless hassle while also helping you ensure that your pet remains healthy and up-to-date on his shots. In the event that your pet needs to stay in a kennel, in Temporary Lodging Facilities on base, or meet with the vet to prepare for an overseas assignment with your family, you will need easy access to these records. Create a file for each pet with their name at the top of each label. This will make it easy for you to simply grab the file on the morning of any appointments.
"Retirement"—Depending on how many retirement accounts you may have, a single file may suffice for your quarterly Thrift Savings Plan statements, annual Social Security statement, and monthly IRA statements for you and your spouse. Again, though I may sound like a broken record at this point, make sure to put the most recent statements toward the front; otherwise, after a few months of stuffing statements into a file in any hodgepodge manner, the files will begin to look cluttered and disorganized, causing your organizational system to fail from lack of consistency and proper maintenance.
"Banking"—Just as with your retirement file, depending on how many banking accounts you may have, a single file may suffice for both checking and savings accounts. Many banks no longer send statements by mail, but banks such as USAA, Wells Fargo, and Bank of America provide online access to statements that you can download and print off for your files. You do promise to put the most statements at the front of the file, right?
"Charitable Giving"—If you contribute to the Combined Federal Campaign, charitable giving should appear on your LES. For all other items, include copies of receipts in this file. If you tithe, your church should provide an annual statement for tax purposes. For other charitable giving that does not provide a receipt, a simple one page stapled to the front of the folder listing the date, amount, and purpose of the donation (Nov. 2nd, $5, homeless guy) will suffice to help you track where your money is going each month.
"Fun Times"—Not everything to do with finances involves boring bills; money pays for vacations and tickets, too. Use this file to place tickets for upcoming events, copies of hotel reservations, receipts for hobbies (who knew that a spouse’s predilection for expensive bikes could serve as a tax write-off?) or perhaps a cash envelope with your discretionary budget inside.
4) Create a long-term storage solution...
Steps one to three created an annual pocket filing system, but you cannot continue to stuff the same old files with more paperwork each year; instead, you need a long-term solution. In January of each year, either use your pocket files to input data into your online tax system or collect the files an expandable file for transportation purposes to bring to meet with a tax consultant.
When you have completed your tax filing, create a copy of each file name for your pocket file holder for the new year, and then put the old files away for safe-keeping (no, recycling and the trash can do not count as safe-keeping!). A simple file box, such as a banker’s box will suffice, though a plastic box with a locking lid will provide a more secure, rain proof solution for moving. Instead of pocket-files, add hanging files to organize your manila files. A pack of 25 hanging files is less than $10 at Office Depot.
Hey presto! You now have both an annual and a long-term filing system, providing an eminently portable solution to the financial organizational needs of your military family. If producing the requisite paperwork for your most recent home loan proved challenging, preparing for your next home loan will seem easy!