This week's challenge is about how to organize bills, so you can pay them on time, find them if you need to reference them again, and finally learn how long to keep paid bills before tossing them.
I doubt that paying bills is in on your list of favorite things to do, but they are a fact of life and cannot be avoided.
There also real financial penalties for paying them late, or not being able to prove you paid them at all, even if you did.
Therefore, in this challenge our goal is to organize systems in your home and life to get this job done as efficiently as possible.
Along with helping you avoid any financial penalties, these systems will help you not worry about what hasn't gotten done, or if bills are falling through the cracks, so you can get on to more fun things in your life.
Are you new here? The Organize Bills Challenge is part of the 52 Weeks To An Organized Home Challenge. (Click the link to learn how to join us for free for future and past challenges if you aren't already a regular reader).
If you worked on last week's challenge, about creating a home mail center, you've already done this step for the Organize Bills Challenge, since you're already corralling your mail and sorting through it as it comes in the door of your home.
The reason you've got to keep all your bills in one location is to make sure you deal with each one of them during your weekly paperwork session (see step 2 below), and don't forget some of them are in your purse, while others are by the bed, and others are on the kitchen table buried under a big stack of other papers, for example.
When you receive any bills in the mail I suggest quickly opening the envelope and writing the due date for the bill on the front of the envelope it came in, so you make sure you know by what date it needs to be paid, and don't miss the deadline.
If you wish to corral your bills in a specific bill organizer, such as one which helps you differentiate the due dates for the bills, you can use a product such as the one shown below:
The next step in the Organize Bills Challenge is to set up a weekly paperwork session for yourself to pay bills, focus on household financial issues, and deal with any other paperwork you need to do around your home.
Why should you do this weekly? There are several reasons that a weekly schedule for bill paying works best, even if you don't get paid every week, but instead twice a month, monthly, every two weeks, or like me, since I work for myself, irregularly.
These reasons include:
I tend, during this weekly session when I pay and organize bills, to also organize receipts, make phone calls related to bills or other home related issues, work on the family budget, balance my checkbook, review my online financial accounts, deal with medical or other insurance claims, make the meal plan and grocery list for the week, update the family calendar, send out notes and greeting cards, and other such activities that need to get done regularly.
During this weekly paperwork session the goal is to pay all bills that are coming due soon.
To help you keep track of due dates, I've create a printable monthly bill organizer worksheet that you can use. The page contains instructions for how to use it to help you organize bills payments. In addition, there are many workbooks available to do something similar (such as the one shown below to the right).
Many bills are paid on a monthly schedule, and their due dates tend to fall at the same time each month. If you pay attention to your bills' due dates for a couple of months you will quickly be able to figure out which bills must be paid in which weeks to pay things in a timely fashion, and can organize bills payment accordingly.
Look at the due dates for all bills, subtract seven days for mailing and processing them (that is an extra cushion for you, to be on the safe side), and you know the last day you can mail them out to be paid (make sure mail runs that day, otherwise subtract another day).
Then, if you pay bills regularly on a specific day of the week each week, as I'm suggesting you do, you can calculate which of those bills needs to be paid during this week's paperwork session to meet your deadlines, and can't wait to be paid during next week's session.
As you pay each bill make a note on your part of the bill you keep in your records the date you paid it, and the check number (or confirmation number if you paid online), so that if you have a dispute later about payment you can tell, quite easily, what you did and reference the right paperwork quickly.
I realize that not all people pay all their bills by check anymore, nor do they receive all their bills in the mail, but instead many people have chosen to go paperless. However, whether you pay bills online or once you receive them in the mail you've got to keep track of them, and this weekly paperwork and financial planning session is when you do that.
There are some advantages to online bill paying, such as having payments automatically withdrawn from your checking account each month for certain regular bills, and not having to receive additional paper into your home that you have to then file.
However, handling things online instead of in an old-fashioned way does not mean you can abdicate responsibility for planning, following up, checking on things, and making sure everything works as it should.
In fact, since there sometimes is no paper to remind you of what's happening, you've sometimes got to be more organized and methodical about how you deal with these types of payments.
For example, during your weekly paperwork session you should do the following related to online payments, to make sure you organize bills payments adequately:
There is no requirement that you get special computer programs or online software systems to help you with paying your bills each month. You can easily do all this paperwork by hand, or with a simple computer spreadsheet if you wish.
However, some people find it helpful to use a program to help them keep track of their spending, and budgeting.
One of the most widely used software programs available is Quicken, which can help you set financial goals and track them, along with planning and budgeting and bill paying. However, some people find it has so many bells and whistles it can be a bit overwhelming.
If you're looking for something simpler I recommend Pear Budget, which is a simple online budget software program, based on the envelope system for budgeting. (Click the link for my review and information on how to sign up for a 30 day free trial.) Pear Budget doesn't help remind you about paying your bills, per se, but it can help you track your spending to keep you on budget, and plan for irregular but planned expenses, such as annual insurance payments, etc. that can otherwise throw you for a loop.
The next step in the Organize Bills Challenge is to set up a simple filing system to keep track of your paid bill receipts and stubs in case you need to reference them again.
Most bills don't need to be kept long term, but can be tossed after a certain period of time.
However, it is in your best interest to keep them around for approximately a year or two in case there is a dispute about payment or something like that, so you've got your records in place.
Further, if you actually do have a dispute about a bill it is best to keep such disputed records, even once you think everything has been resolved, for at least two to three years (or longer, depending on your state's statute of limitations for contract disputes or open accounts).
In a couple of weeks we'll talk in depth about setting up a filing system, but this week I'll briefly discuss how to save these records of paid bills.
The easiest system, in my opinion, is to save all your paid bills by the month in which you pay them. That means, at the beginning of the year, you should create 12 folders, labeled January through December, and as you pay each bill just drop the paid bill into the correct month's folder. In the alternative, get an expandable folder with twelve compartments (such as the one to the left, and have one of these designated for each year.) If you need to reference a specific bill just go to that month's folder and retrieve it.
This system makes it really easy to file the paid bills at the end of your paperwork session too. You can just drop basically everything into the file folder and move on to the next task. It is so simple and easy there is no reason to put it off until later.
In my opinion, there is no need to have separate folders for each type of bill. The only excepetion to this would be bills that you need to keep as records for tax purposes. Those bills should be kept in a separate set of tax documents files that we'll discuss more in depth in next week's challenge.
The final step, in the Organize Bills Challenge, is to create an annual routine of purging your filing system of old papers. Again, we'll discuss this in more detail in a couple of weeks when we take the Home Filing System Challenge, but here is the information specifically about bills.
At the end of each year, when you make your 12 file folders for the upcoming year for your paid bills, take a minute to throw away all the bills from about two years ago.
This will keep you from accumulating too much paper in your filing system that isn't needed. Make sure to shred any documents which contain personal identifying information or account numbers that could be used for identity theft.
I would love to know how this week's Organize Bills Challenge is going. You can tell me your progress or give me more ideas for how you've organized your bills in the comments.
I also love before and after pictures of your bill paying system, and would love to see some of yours. Submit your pictures (up to four per submission) and get featured in the Creative Storage Solutions Hall of Fame. You've worked hard to get organized, so now here's your chance to show off!
Further, I've created a list of decluttering missions to do to get rid of financial and bill clutter, so check it out and if you do a mission tell me about it.
We're working on our homes slowly, one area at a time, so don't get too distracted from the Organize Bills Challenge this week. However, I want you to know that this I don't expect you to deal with all of your papers this week, but instead we are mid-way through dealing with our paper clutter.
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