Friday, January 5, 2018

Get Organized for Financial Fitness

Lots of people include "getting organized" on their list of New Year's Resolutions. Getting organized—and staying organized—can help you on the road to financial fitness.

Here are some examples:

1. Avoid unnecessary late fees and excess interest charges by devising a system for paying your bills on time. Sign up for autopay or manage due dates with an accordion file or spreadsheet. Designate a place for the mail and handle as it arrives so you don't lose a payment notice.

2. Keep a folder for credit card receipts. Open your statement promptly, reconcile it against these receipts, and look for irregularities. Most months everything checks out, but in the past, I've found augmented tips on restaurant bills and duplicate charges (the pre-tip amount, and then the entire bill rung up again to include the tip). Research charges for which you have no receipt, and report discrepancies as soon as you discover them. Dispute incorrect charges. Watch for transactions reported as cash advances instead of purchases; they begin accruing interest immediately, which then subjects you to interest on all subsequent charges until the account is zeroed out.

3. Review your bank and investment statements regularly. Watch for unauthorized activity, new fees for services that were once free, discontinued or reduced dividends, and any drastic changes in the performance of an investment.

4. Keep a folder for tax deductions, such as charitable donations (including purchases on behalf of a charity) and unreimbursed workplace expenses. If you drive your vehicle for business or to do charity work, maintain a log of the mileage. If you have a home business, keep a separate folder for expenses related to the business. Have trouble keeping track of paper? Scan your receipts and file them electronically.

5. Speaking of taxes, it's time to create a folder for forms you'll need to prepare your return. Companies will begin mailing W2s and 1099s by the end of January. If you have a mortgage, look for a 1098. Some mutual funds and brokerages include a 1099 with the year-end statement in December. Round up other deductible receipts such as property tax statements, vehicle excise tax receipts, charitable donations, etc. Review last year's tax return to determine if anything might be missing from this year's folder.
Organize your financial life so you avoid missing payment deadlines or overpaying accounts, and that you benefit from all legitimate tax deductions. With a little effort and attention to detail, you'll suffer less stress and unleash more money for the things and experiences that add value to your life.

What tips do you have for getting organized? I'd love to hear your comments.

Sharon Marchisello is the author of Live Cheaply, Be Happy, Grow Wealthy.

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