Tired of sorting through shoeboxes of receipts and overflowing piles of paper to prepare your taxes? Don’t stop now. This is the time to create a system to organize your financial records that will make the whole process easier next year. It doesn’t have to be anything fancy. But it could save your hide if Uncle Sam comes a-knockin’, if your wallet gets stolen or if your house ever burns down. Not to mention the time you’ll save in the long run. 
Organizing your financial records can also give you a firmer grasp of your finances, so you have a better idea of what you can afford, says professional organizer Julie Morgenstern, author of “Organizing From the Inside Out.” Who knows? You may even end up with some extra cash. “About 70 percent of my clients find money,” Morgenstern says. “They’ll find checks that didn’t get deposited, bank accounts they forgot about or medical bills that they can file to get reimbursement from their insurance company.”
We talked to Morgenstern and other experts to get their top tips on which records to toss, which ones to keep and the best ways to store and organize it all.
Step 1: Toss what you can
A lot of what you’ve got stashed in those piles of paperwork and in your overflowing file cabinets can probably be pitched. Just make sure you protect your identity by shredding anything that contains more personal information than you can find in the phone book. Among the records you can purge:
Receipts. You can throw away receipts for most purchases pretty quickly, especially if you paid with cash. If you paid with a debit or credit card, keep those receipts in an envelope or on a receipt stand (basically, a nail on a base) until you’ve checked to make sure your bank or credit card statement is accurate. The only receipts you really need to keep longer are those for home improvements and major purchases (to get the warranty or prove their value in the event of loss or damage) and those you need for tax purposes. Of course, if there’s a chance you might want to bring back that expensive new coat or pair of shoes, you should hang onto to those receipts as well, at least until the return period is up.
Credit card statements. Most experts say you can toss monthly statements once you’ve checked them for accuracy, unless they’re your only record of a tax-related transaction. If you end up needing a statement for some reason, most banks archive them for you online.
Junk mail. Throw away investment and bank brochures you’ve already read, pre-approved credit offers and catalogs or magazines more than 3 months old. (If they’ve been around that long, you’re never going to read them.) Be ruthless when it comes to invitations to past events, offers you’re not ready to act on immediately and old greeting cards, unless they contain a special handwritten message.
Step 2: Sort and organize
Once you’ve purged, separate must-keep papers into three categories: those you need to keep for one calendar year, those you need to keep for a longer period and hard-to-replace documents like birth and marriage certificates. (See chart: What records to keep, how long to keep them.) Then decide on a home for each. “Just make your system as simple as possible so you actually use it,” says Brandi Kajino, a home office consultant in Vancouver, Wash. “You can have a beautiful filing cabinet but if it’s empty, that’s not helping you.”
Documents you’ll keep for a year. These records are best kept in a filing cabinet or box that’s easy to access, organizers say. Create folders with topics such as pay stubs, bank statements, utilities, phone and auto bills. This is also the place to keep tax-related receipts for business expenses and charitable contributions. If you hate filing or you’re short on space, try an accordion file or a set of stacked letter boxes, Kajino says.
Long-term storage. Most organizers recommend clearing out your files after you do your taxes and placing your return and other documents in a box or bin labeled with the year. To keep them safe and dry, choose a plastic container with a lid. Wondering how long to keep your returns? The IRS has three years to audit you if it discovers good-faith errors; six if you significantly under-reported your income. But many experts say if you have the space, the safest strategy is to keep them forever. “You just never know when you’re going to have to go back and prove something,” says Michael Tonkovic, a director in PricewaterhouseCoopers’ Washington National Tax Services group. “Let’s say you worked for a pizza parlor when you were in college and when it comes time for you to be paid Social Security, you don’t see those wages on your wage statement for Social Security. One way to prove that is if you kept that tax return and W2.” Another scenario: Your employer or tax accountant is being audited for fraud committed 10 years ago. (There’s no time limit if fraud is suspected.) Chances are, the IRS is going to want to see your returns as part of its investigation.
Vital documents. Records such as marriage and birth certificates, passports, Social Security cards, wills, death certificates and titles should be kept in a very safe place. Some experts say a safety deposit box is best, though it might be tough to access at odd hours, and if you die, the box may be sealed. Another good option: a fire and waterproof box or cabinet. Either way, make sure you keep copies of these documents in a separate location. Don’t forget to include a household inventory or video, and a list of all of your important accounts.
Step 3: Stay on top of it
Now that you’ve created a system, the key is to actually use it. Some tips:
Create a home financial center. Choose a single place where you will open bank statements, pay bills and file documents. Your computer, shredder and scanner should be nearby. The best location, says Morgenstern, is where papers naturally accumulate. “If your papers are all over the kitchen counter and your office is upstairs, you have to move your office to the kitchen,” she says. “You need to work where you gravitate because you’re never going to retrain yourself.” That may mean clearing out a cabinet or investing in a rolling file cart.
Plan for incoming paper. To prevent piles from forming again, have a plan for how you will handle mail as it comes in. Kajino recommends a few folders or letter boxes with labels such as “action” for papers you need act on, “data entry” for phone numbers or receipts and “read and review” for newsletters and articles you want to read.
Set home office hours. Whether you spend a little time each night or two hours every Saturday morning, pick a regular time to pay bills and file your financial statements, then put it on your calendar and stick to it. “It should be the same day and time of day every week,” Morgenstern says. “You can’t just do it when you’re in the mood or when you have spare time. Neither of those ever occurs.” Plan to invest a minimum of an hour a week.
Go digital. Check with your bank to set up online bill pay saving them there instead of in paper form. The IRS considers electronic documents to be as good as paper. Just make sure you encrypt the files and store backup copies on a USB flash drive, a CD, a DVD, a portable hard drive or with a Web-based storage service.
MD Tip: MoneyDesktop makes it easy for you to track spending, reconcile your bank statements and eliminate extraneous paper.
By Michelle Crouch, Via CreditCards.com
Published: March 15, 2010
22.Mar.10 
Organization, Taxes 
Comments (0)
With the average American saving around 3.3% it seems like getting out of debt could be difficult. However, in a recent article author Laura Rowley points out,
If savings behavior isn’t changing, consumer attitudes may be. A recent Gallup poll found 62 percent of Americans say they enjoy saving more than spending, while 35 percent reported the reverse. Back in 2006, respondents were split about 50-50 on the question. Moreover, 57 percent say they are spending less money in recent months than they used to, up from 50 percent last July. Among the newly frugal, 38 percent say this spending pattern is the “new normal,” while 19 percent say the budget cuts are temporary.
Rowley goes on to explain that the average American can significantly reduce their debt by using a small portion of their extra income to pay down their debt. In her example she points out that one home owner was able to save $23,900 over the life of the loan by paying $35.86 more a month towards his home loan.
At MoneyDesktop we are passionate about helping people get out of debt as quickly as possible. The best part is, it’s not that hard. Our software shows you where your money is going and gives you step-by-step instructions on how to get out of debt. Results like those mentioned are not uncommon for our users, so if you haven’t already, give MoneyDesktop a try for free today.
Read all of Rowley’s article on Yahoo! Finance here
photo credit: dieselbug2007 on Flicker
Tags: Debt, Debt Elimination, Home Loan
08.Mar.10 Budgeting, Credit Card Debt, Debt Management, Payoff Mortgage Comments (0)
Your Social Security number is one of the keys to your financial health. It’s a unique identifier lenders use to assess your creditworthiness. It’s also exactly what a would-be thief needs to apply for a credit card, mortgage, car loan or job in your name.
If you’re like most Americans, it’s also something you give out all too frequently.
“As with so many procedures in the business world, your Social Security number is something that many companies ask for, so no one really questions it,” says James Van Dyke, president of Javelin Strategy & Research, a research firm that tracks financial services topics. “But giving out your Social Security number is definitely a practice consumers should think twice about.”
Case in point: A recent Javelin Strategy & Research report — the 2009 ID Fraud Survey — found that, among identity theft victims, 38 percent said the perpetrator had obtained their Social Security number and used it in the crime. “It’s certainly logical to say that you could eliminate 38 percent of your risk of identity theft by limiting access to your Social Security number,” says Van Dyke.
‘Your Social Security number, please’
Still, saying it and doing it are two different things. Many of the forms you encounter during the day — at doctor’s offices, at the dentist, at your child’s school — ask for Social Security numbers. Retailers may ask for it, too, when accepting a check for payment or before issuing check cashing privileges. Potential employers also need it, and they may even want a copy of the actual card, says Linda Foley, founder of the San Diego-based Identity Theft Resource Center (ITRC). You’ll also be asked for it at your local Department of Motor Vehicles, car dealerships, pawnshops, drugstores — even at the airport, should you lose your luggage, she says. In fact, you may be surprised at how far-reaching this practice is, says Foley.
“A few years ago, we were putting some of my mother’s things into storage, and they wanted her Social Security number to use as a passcode,” she says. “It’s that prevalent.”
Just because someone asks for it doesn’t mean you have to comply, says Michael J. Arata, the author of “Identity Theft For Dummies,” especially since there are only a handful of organizations that actually have a valid need for it. For instance, anytime you’re applying for credit — for a new credit card, a loan, new telephone or cellular service — the creditor will need your Social Security number to run a credit check. You’ll also need to provide it if you are applying for federal or local government benefits such as Social Security, Medicare or Medicaid, unemployment insurance or disability. Another example: If you or your children receive services or aid at the state or local level, such as free or reduced fee lunch or financial aid. The local motor vehicle department, thanks to the USA PATRIOT Act, has the legal right to ask for Social Security numbers, too. In addition, when you complete a cash transaction totaling more than $10,000 you’ll be required to provide your number so that transaction can be reported to the Internal Revenue Service, says ITRC’s Foley.
Medical professionals have their own impetus, says the ITRC’s Foley. “The reason a doctor or a dentist asks for your Social Security number is that, should you die while under his or her care, they are required to put your Social Security number on the death certificate,” says Foley.
Even so, fulfilling non-credit-related requests — even medical-related requests — is purely optional, says L. Jean Camp, an associate professor at Indiana University and the author of “Economics of Identity Theft.” “The problem is that you have the right to say that you’re not going to give out your Social Security number, but a business owner has the right to say he’s not going to do business with you,” says Camp. “Most companies aren’t being malicious. They’re just being cautious by giving themselves a way to track you down if you don’t pay a bill.”
Gracefully saying ‘No’
One of the best ways to get out of giving your Social Security number to someone is to simply overlook it on your paperwork, says Arata. You may get by without a confrontation. If you’re questioned, however, ITRC’s Foley suggests being proactive. “The most basic thing you can do is ask the person or organization why they need it. One of the most powerful things you can say is, ‘Is there a law or requirement that I must provide it to you, and can you tell me what it is?’ You can also ask the person requesting your Social what will happen if you don’t disclose it,” she says.
Often, as in the case of a school or a charitable organization, they simply want it to use your number as a unique identifier. In that case, says Javelin Strategy & Research’s Van Dyke, you’ll need to start negotiating again. “Say, ‘In order for me to become your customer, I really need you to find an alternative record keeping method because I know giving out my Social Security number places me at great risk.’ When you say it like that you may get better results,” he says.
Even doctor or dentist offices should be willing to forgo your Social Security number — especially if you have health insurance. And if they won’t? Ask to give your information directly to the doctor and have him or her input it into the system for you, says Van Dyke. ITRC’s Foley says most medical offices may also feel comfortable without it as long as they have an emergency contact on file — someone who knows your Social Security number and could provide it in the event of death.
And what of the worst case scenario — when you absolutely can’t get out of it, but you still don’t feel comfortable? You can always make up a number, says Camp, but if you do, make sure you write it down and don’t inadvertently steal someone else’s identity. “If you go this route as a last resort, make sure you put zeros in for the two middle numbers,” she says. “There are no Social Security numbers that have double zeros in that section.”
By Karen J. Bannan via creditcards.com
Tags: ID Theft
01.Mar.10 Uncategorized Comments (0)
