Monday, February 9, 2009

My filing system

I have a straightforward filing system that took me a few years to figure out.  Here are the goals:

1. Maintain most records for at least 3 years, but not much longer
2. Keep tax records for 7 years, and other special records indefinitely
3. Have current-year records readily accessible
4. Make it quick to go through the mail
5. Make it easy to file papers and easy enough to find a particular filed piece of paper in the comparatively rare occasion you need to
6. And for gravy, track receipts in the financial software, hang on to them for returns if needed
7. File for flexible spending account expenses

And here is how they are accomplished: 

For the first and third goals, we have 3 file drawers and 1 file box, each for a year.  The file box is for the current year and it lives near the bill-paying area.  In January, empty the oldest drawer, take the contents (except taxes) to a commercial shredder, and put the contents of the file box in the empty drawer.  The rest are in a secluded file cabinet.

For the second goal, there is a drawer of permanent files.  It contains medical reports, instructions in the event of various peoples' deaths, career notes, older tax records, and so forth.

For the fourth goal, we have a set of 3 paper sorters: bills, things to file, and recycling.  Junk mail goes straight in recycling.  Explanations of Benefits from the insurance and other "notices" go straight in the place to file.  I think you already know where the bills go when they come in.  After they are paid, they get stamped "PAID" and move to the "to file" area.

For the fifth goal, we have a simple set of folders.  Here's a sampling of the titles: Automotive, Cats, Child Care, Credit Cards, Court (this is where you put the class action stuff), Health Insurance (for EOBs and other notes), Health (one for each person), Home Maintenance, Investments, Keepsakes (greeting cards, letters), Loans, Utilties, Tax, Work (for each worker).  These titles are deliberately broad.  The busiest folder is probably "Utilities," but it has never been a problem to find the appropriate cable bill or cell phone bill in the pile, because the pile is pretty small and the need to find it is infrequent.  When these broad folders don't hold a particular piece of paper, we'll make a new broad folder to hold it and other things like it.

For the sixth goal, there are three shoe boxes. The first box collects receipts out of pocket and purse.  They are then entered weekly (or perhaps bi-weekly, but no longer than that) in the financial software and stamped "entered."  The next two boxes are for even and odd months.  Receipts generated in an even month go in the even box, and from an odd month into the odd box.  At the start of each month, dump its shoe box into the shredder.  

For the seventh goal, insert a step special for FSA-applicable receipts between the receipts being entered and their being filed in their appropriate month shoe box.  Put them in a folder, and take that folder to work to file the claims.  Stamp all receipts filed "faxed," then bring them back home and put them in the monthly shoe box.

I have lately taken to scanning my tax data so as not to have it take so much space in the file cabinet.  I also figure I can retain it indefinitely in digital form because storage capacity increases faster than the digital footprint of my tax information.  I expect to scan medical reports to keep them likewise.