Twelve-pocket folders

The coming of 2012 means Out with the Old and In with the New -- specifically, when it comes to my financial stuff, it means out with the old 12-pocket organizer and in with the new one.

I don't have a filing cabinet for our financial records.  Our home has a little room my family calls the "Sewing Room", completely off-limits to the children.  I use this tiny space to store sewing supplies, but also meds, financial records, gifts, and heirlooms. I've got a big, beautiful desk my dad made for me and a small bookshelf.  I don't really want to bring another big piece of furniture in.

I retreat to the Sewing Room every Saturday evening for a variety of tasks.  I listen to Garrison Keillor, pay the bills, do a bit of mending.  Whiskey is sometimes involved. After bills are done and the News from Lake Woebegone has reassured me that all the women are strong, all the men are good looking, and all the children are above average, I shut down the computer for my internet sabbath.

During the week, I keep the unpaid bills and other unopened mail in a cubby hole in my desk.  After I open the mail and pay the bills on Saturday night, I file things away in this year's pocket folder.

Filing the bills and such in a folder has organizational advantages beyond saving space. (And money, too?  Beats me how much a filing cabinet costs these days).  After helping a bunch of my friends with their finances, I learned to appreciate the value of a small, lean system.  In Getting Things Done, David Allen talks about the difference between Action files and Reference files.  This year's bills and receipts are action.  Bank statements from 5 years ago, appliance warranties, and other old information are reference.  It's a heck of a lot easier to file things if the filing system is small, so having a small binder for action stuff makes putting things away relatively quick.  I can store the binder on a book shelf.  I like this folder system.

If you're curious about the categories for my pockets, here they are (although I'm probably going to tweak them this year, and I'm sure other people would want different categories anyway):

• ATM/Bank statements
• Auto
• Charity
• Credit Card statements
• Insurance Policies and Bills
• Medical Bills
• Medical Admin (Explanation of Benefits and reimbursement info)
• Mortgage and House Expenses
• Pay Stubs and Expense Reimbursements
• Pets and Kids 
• Tax stuff
• Utilities/Telephone

There's a bonus pocket in front where I keep receipts.  You'll notice there's nothing about investments; I keep that information separate in person-specific binders.  

Each year the folder starts skinny (that yellow is only an inch-ish thick) and gets fatter as the year goes on.  At the end of the year, I close up the old year and store it out of the way in the back of the closet.  Come tax time, I'll pull it out and have everything I need in one place.

For most things in these folders, it's safe to toss the information after 7 years.  When enough time has gone by, it's easy to empty out this envelope.  I save home-repair receipts all together with our original purchase stuff (for the day if/when we sell the home), shred and/or recycle the rest of it, and then repurpose the envelope for a future year.

What's the take-away from this?

If you don't have a filing system you like, you shouldn't let the cost of a filing cabinet keep you from developing a system you do like.  You can be small and organized.  But even if you have a filing cabinet you like to use, you could use the "action" idea to make filing stuff away easier.  Move this year's information to one section.  Have folders marked "2012--Credit Cards" and  "2012--Medical Receipts", and file them close to the front of the drawer, with old information in the back of the drawer.

No recommendations one way or the other about the whiskey.  For that, you're on your own.