My Filing System-Part Two

I am such a dork. I just realized that when I was doing my posts on filing I wrote 2 posts explaining the 2 year catch all folders and never even commented on my permanent and remove/replace filing system. So I’m just going to go back and write the other post I meant to write now.

I keep my taxes for 10 years now. I really liked the rotating system proposed by the Freedom Filer. Basically you set up 10 file folders and label them Tax Year 1, Tax Year 2…Tax Year 0. The number represents the last digit of the year the tax return was filed in. For example, my 2009 tax returns are filed in Tax Year 9. When 2019 taxes are completed I will shred my 2009 tax returns and put the 2019 tax returns in Tax Year 9.

I also used the Freedom Filer suggestion of a remove/replace section of files. These are documents that are frequently updated, renewed or replaced. Things like insurance policies, service provider contracts and retirement statements. When a new document comes in the mail, I take out the old one, tuck the new one in its place and shred the old one. It’s very simple and that way I never have to go through and purge out years of files.

My last section is for my permanent files. These were a challenge to me. Have you ever read a book that tells you how to file? Almost all of them start with “Decide on the categories you will need for your filing system”. Seriously? That is why I am reading this book. I don’t know where to start. Tell me what I need to keep and what I can throw away. What are the basic categories I will need to organize my paperwork? And how do I file it? Is car insurance filed under “car” or “insurance” or “the name of my insurance company”?

This was the list I found that seemed to make sense to me.

1. Tax Returns-Include 8 folders for the last seven years plus the current year. Place all W2’s, 1099’s, interest statements and returns in this file.
2. Retirement Accounts-Create a folder for each retirement account you have, 401(k)’s, IRA’s, etc and include the statements.
3. Social Security-Include your social security benefits statement.
4. Investment Accounts-Create folders for each brokerage account, mutual funds, or individual stocks and keep the statements here.
5. Savings and Checking Accounts-Add files for each separate account you have.
6. Household Accounts-Here you will keep track of your House title, home improvement receipts, mortgage and utility statements.
7. Credit Card Debt-Add a folder for each card you hold.
8. Other Liabilities-This folder would include student loans, personal loans, car loans, etc.
9. Insurance-This folder contains all insurance policies, home, life, car, health, disability, long-term care.
10. Will or Trust-Keep a copy of your will and living trust here.
11. Children’s Accounts-Include any college savings plans or trusts set up in your child’s name.

I tweaked it a little bit, but this is what I used as a jumping off point. My car insurance is now filed in a folder marked “insurance-car”. I keep my taxes for 10 years instead of 8. I made medical files for each of us and a folder for our pets. But this is working pretty well so far. I know where to find things. It makes sense to me. It’s not so complicated that I can’t use it.

Filing With Catch All Folders

One of the problems I've always had with filing is that I want to keep everything. Always. I am afraid of getting rid of a paper I might need someday. But of course I never do. And if I did I would not be able to find it anyway because it's in a huge stack somewhere.

Periodically I would create a new filing system. And since every piece of paper needs to be in a file my systems got very complicated. And time consuming. I really didn't want to file stacks and stacks of paperwork every week. Some paperwork I needed to keep, but only for the short term. What do I do with all of that stuff?

When I started this project I got on the internet and started reading about filing systems. Maybe I could find one that works for me, right? Right! I mean, I can't be the only one with this dilemna.

I came across the Freedom Filer system. One piece of their system is a 24 month rotating file system. You take 24 file folders and label them with the months of the year. Since you have two years worth one set will be labeled "even year" and the other "odd year". This is where you are going to put all your monthly paid bills, receipts, and other odds and ends. Since we are in February 2010 right now, any paperwork I get I put in the February-even year file. When we get to March I will switch to the March-even year file. When February 2012 rolls around I will need to put that months' documents in the February-even year file. I will simply sort out the February 2010 file, shred most of it, and anything I really do need to keep I will file in a more permanent place. After two years it is much easier for me to throw my paperwork away.

I'm happy knowing I have any paper I could possibly need, it's all stored neatly away and I can find anything I might need in just a few minutes. I also added two folders labeled "Taxes-even year" and Taxes-odd year". This is where we put donation receipts, paid car taxes, w2's and any other documents we will need to do our taxes. No more combing through mountains of paperwork at tax time to find documentation for deductions.



I tucked all my files in a pretty basket and leave it out on the counter where papers used to pile up. It is so easy to use that my papers get popped into a folder rather than laid on the counter "just for now". We all know how dangerous that is.

My Filing System

Last month I was thinking about all the paperwork in our house that needed to be filed. I realized our filing system was not working for us, but had no idea how to set up one that would so I started looking around on the internet.

I found this site and really liked how the files are set up. My favorite part is the 24 month rotating catchall files. You will need 24 files labeled with the months of the year. You will end up with 2 files for each month, one of which will be labled "even year" and the other "odd year".

January-even year
January-odd year
February-even year
February-odd year

This is the place where you put all of your receipts, paid bills, account statements and any other paperwork you might need but that does not have a permanent filing home. Since we are in February 2010 I am putting all of the documents I'm getting this month in that file. When February 2012 (the next even year) comes around I will go through this file and shred most of the paperwork in this file. Anything that I still need to keep will get filed in a more permanent place. And then I will reuse my February-even year file for my February 2012 paperwork.

I love this system for several reasons. The two biggies are that I feel like I have to save everything and this gives me a place to do that. The second is it's so simple to file since over 90% of my paperwork ends up in these files. I figure that in 2 years I will have a pretty good idea what needs to make it into my personal files and I should be able to shred the rest pretty easily.

This is what I made all the cute file folders for. I have all of them sitting on top of my kitchen counter in a basket that used to be a magazine rack. You can see it here in one of my "before" pictures.



As new paperwork comes into the house it is getting filed quickly and painlessly into these folders and I'm starting to make some progress on my old stack of paperwork that needed to be filed too. My system still has a ways to go, but I love seeing progress. Only 17 days left in Filing February.

The Before Pictures...

Here are some pictures of our current filing "system". I am using the word system very loosely here.



This little corner of the kitchen is our kitchen office area. Right now it's known as the chaos counter. The coutertop actually looks pretty good in this picture.



I clean it off periodically and then the next thing I know there is stuff all over it again. This is were about 90% of our papers end up so this is where I'm planning to store all the active files. Our permanent documents and completed tax returns will be stored upstairs in one of the closets.

On the bright side, any sytsem we manage to implement will be better than what we have now.