New Year – New Beginnings

Yes, the New Year is upon us and it is time for new beginnings. Take the time at the beginning of this year to get organized. Make sure you start the year with a spending plan/budget. Create file folders for all your yearly expenses, for example, create separate files for your mortgage statements, bank statements, gas bill, electric bill, etc. Then, as the bills come in and you pay them off, file them in their appropriate folder. Also, create a system that tells you when a bill is due. You can do this with Quicken or with a calendar. Let’s say that your car payment is due on the 15th of the month. Place a note on your calendar reminding you that the bill is due on that day. If you pay it online, then you just pay it on the day before. If the date falls on a weekend or holiday, make sure you pay it before to avoid late fees. Banks are notorious for charging you a fee for whatever they feel is late. They will not waive the late fee even though you paid it online on the day it was due. They tell you that it did not post until that Monday. Therefore, you payment is late. Horrible isn’t it? Anyway, learn to avoid these fees.

If you mail your payment, then set the reminder on your calendar about seven days ahead to account for mailing time. Of course you want to make sure that you have the money available to pay that bill if it gets to the payee before the due date. Even if you post date the check, they will process it on the day they receive it. The banks will process the check. If you don’t have the funds available, the check will bounce and you will be charged with bounced check fees and late payment fees from the payee. It is best to pay your bills online.

Yes, some banks do charge you for online bill paying. However, credit unions usually do not charge you. Also, you can pay your bill directly from the merchant’s web site. Most utility companies, mortgage banks, credit card companies etc.offer you the ability to pay them on their site. If you do that, you don’t have to pay your bank any fees for online bill pay.

Also, you want to invest in a cross cut or micro cut shredder. Shred all your credit card offers, your old bills, etc. You do not want to fall victim to identity theft. Remember to hold onto any documents you used to prepare your income tax returns. Personally, seven years’ worth of documents is good. You don’t need to hold onto your utility bills, unless you have a home business and you are allocating a portion of your home to that business. You also want to hang onto all your utility bills and expenses on rental property, as well as any income you earned.

At the end of each year, you want to shred anything that you do not need and file away only those documents that you need. Remember if own stocks and bonds, you want to hang onto any documents relating to the initial purchase of those items. These documents give you your basis on your investments. Hang onto them. If you sell the stocks or bonds, you still want to hang onto them for seven years, in case you are audited.

One great thing to invest in is a scanner. There are some scanners out there that offer you the ability to scan in receipts, invoices, business cards, etc. and organize them for you in a PDF format. I have tried the Scansnap S1500 from Fujitsu.  That is one nice machine, albeit, the price runs from $398 to $415. There is also the Neat scanner. It advertises that it does the same thing as the Scansnap, but I have not tried it.

Anyway, if you do get a scanner, you can scan in all your documents and not boxes of paper all over your house. This is the first year I am seriously considering a scanner. The only reservation I have is whether the IRS or the state would accept scanned copies as proof of a deduction. They always seem to want original documents. I will have to research that and get back to you on that. For now, Happy New Year!

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