Filing Day

Since our third child was born, I’ve found that it’s been more and more difficult to find time for some of the more routine and mundane personal finance tasks. For me, tops on that list of “mundane personal finance tasks I can postpone because there are three kids who each need some Dad time” is filing away papers.

Over the past few months, papers of all kinds – bills, statements, receipts, documents, and other things – have just slowly accumulated in the two inboxes I keep in my office (one strictly for filing and one for all kinds of things). As the pile got larger, it became ever so much easier to just worry about it later.

This past weekend, I finally faced the giant pile of papers and took on the large task of filing things. Here are some of the things that I learned.

An orderly electronic filing system is worth the startup cost. A scanner with an automatic document feeder might be a notable expense, but it’s honestly a similar expense to a high-quality filing cabinet. The advantage is that such a scanner makes it very easy to transition to an electronic filing system, where you simply drop documents into the scanner, have each page saved as a document on your computer, and then you name and identify each file appropriately and save it in the right folder on your computer (obviously, this goes hand in hand with backing up your data with great regularity).

Quite simply, this takes up far less space than a filing cabinet. You can just scan the documents you wish to scan, then shred them. Only the most vital of documents need to be retained in their original form.

If you’re scanning with a high-quality system, all of the documents are searchable on the computer, which means you can just search your entire stored document folder for, say, “Target,” and get a list of all documents that contain that word. This makes actually using the stuff you’ve filed much easier than before.

I use a “everything alphabetical by whatever letter makes sense” filing system. Seriously.

When a set of documents makes sense together, I just name that folder in the way that makes the most sense to me, then I just alphabetize all of those folders. Then, when I get a document, I can usually figure out where it goes within a guess or two, and finding that folder I’m looking for is usually very easy.

I’ve tried a “standardized” system in the past, but it always required me to remember names for specific things to find them. Frankly, I don’t look at the stuff I have filed every day – or every month, for that matter. Having to remember specific names or patterns to make the filing work is a mistake because I’m simply never going to remember it for my purposes. It might work for an office environment where you use the filing system many times every day, but for me, it’s just not worth it.

If you’re starting from scratch, a large body of documents makes it easier than just a few. It is incredibly easy to overlook some set of documents or records that you wish to retain if you start with just a few documents. In fact, a later influx of unexpected items can make it easy for you to just throw out your filing system entirely and start over from scratch.

Don’t get me wrong – a large mountain of documents to file can seem intimidating. However, they also give you the advantage of getting your system right. Spread out, make piles that make sense to you, and file them away in a way where it’ll be easy to know immediately, when you receive something new, where it will go.

If it’s old or unimportant, don’t be afraid to toss it. I don’t keep any non-essential documents more than seven years old in paper form. I do keep old stuff in electronic form, but that’s because hard drive space is increasing at a far faster rate than my document archives are and it’s easy to just stick documents I don’t want to look at in another folder where I don’t have to be bothered. Electronic documents don’t take up physical space after all.

Old documents take up space with no real purpose. Unless it’s a birth certificate or a Social Security card or something similar, don’t waste space in your home keeping it more than a decade.

Know why you’re keeping stuff. I like to keep old energy bills so I can track our energy usage over time as we change things. It’s really hard to tell a difference with small things, but as we do bigger things (particularly those related to heating and cooling), I can see a year-over-year difference.

However, I don’t keep things like cell phone bills from previous cell contracts. I might keep the last one just to verify that the contract is cancelled and the plan is resolved, but why keep the other statements? There’s virtually no positive reason to have a cell phone bill from two years ago from a different provider than the one you have now.

It took me six hours to file everything in a way I was happy with, but the end result was a much cleaner office and a sense of a necessary job completed well. I call that a win.

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  1. James says:

    Hey Trent – got any recommendations for a high-speed scanner? I’m in the market, as it were.

  2. Mike31 says:

    Fujitsu’s Scansnap scanners are good. I’ve got one that works really well and I’ve seen it recommended in many other places too.

  3. Stephen says:

    Also, what scanning software do you use? I’ve looked into doing something similar to this in the past, but a lot of the OCR software was either super expensive or else not quite sufficient to really get reliable, I-can-search-all-text-in-this-document, type results.

  4. Tyson says:

    I love this idea. I like to be pretty organized, but its hard at times. A scanner would definately do the trick and get rid of a lot of paper chaos in my life.
    Would like to know a recommendation/price as well.

    Thanks!

  5. valleycat1 says:

    Per Trent: I use a “everything alphabetical by whatever letter makes sense” filing system.

    This is great advice. For files only you use, file them the way your brain works, not by some superimposed standard system. The whole point of a filing system is to be able to find what you’re looking for quickly – & to be able to add to the files easily without a lot of thought.

  6. Ryan says:

    Adobe Acrobat is probably the gold standard in PDF creation – it does OCR and all that cool stuff. But it’s pricey. Alternatives include Foxit Software and Nitro PDF. I’m not sure if there are many free tools that do OCR.

    EverNote does OCR after syncing to the server, but then you’re dependent on EverNote. Not the best solution.

  7. STL Mom says:

    Is anyone else feeling the urge to reread “From the Mixed-Up Files of Mrs. Basil E. Frankweiler”?

  8. Johanna says:

    This reminds me of the old filing cabinet from my lab in grad school. Built up over the years by many previous generations of grad students, it mostly held the manuals for all the different pieces of lab equipment. There was a folder for “Pumps” filed under P, and a folder for “Lasers” filed under L. There was also a folder labeled “Don’t know what these are” filed under D, and one labeled “Empty” filed under E.

  9. David says:

    The largest folder in the cabinet at my first place of work was the subject of some discussion as to whether its contents met the criteria for Russell’s pardaox. It was kept under “U”, for “Unfiled”.

  10. AnnJo says:

    The problems with a “whatever makes sense to you” system are:

    1. that this will change over time, so your electric bill may get filed under “electricity” on year, “utilities” another and “energy” later; and

    2. what makes sense to you may not make sense to someone else who has to file or find something in your files, like your spouse, accountant, estate executor, etc.

    Since I pay my bills with Quicken, all payment transactions have a payee name and recurring transactions have a memorized payee name, and I can produce reports by payee.

    For the last 25 years, I’ve used the Quicken payee name as the file name for bills and the account name (+ the last four digits of the account number if I have multiple accounts with one institution) for statements, both for office and home, and then file everything alphabetically. And neither I nor my various assistants over the years ever have any problem filing or finding things. My electric bill is always going to be filed under the name of the utility. If the utility changes its name, we will open a new file. We can always search in our Quicken reports by category, date, etc., if we forget the name of a payee.

    This may go through a few more file folders since you’ll have separate folders for water, garbage, electricity, cable, telephone, etc., instead of one big folder for utilities, but it makes it so much easier to file and find things, I would never go back to a “whatever makes sense” filing system. And dedicated label-makers are now cheap and make opening new files quick and easy and keep the file names readable.

    As we’ve been transitioning to electronic filing, we’re doing batch scanning by year and letter of the alphabet, of older files. So we’ll pull out all the files that start with the letter A, take out all the 2009 bills/statements/mailings keeping them in alphabetical order, and scan them as a single file named 2009 A-Vendor Files. The slowest part of scanning is naming the folder and it’s just a lot faster to do it in fewer batches.

  11. A.J. says:

    I don’t see the problem with 1)…once you discover you’ve got information in two places, just rename everything in the older folder (heh) and move it to the current folder.

  12. Bill says:

    I just got a scanner with a document feeder (VITAL!) that my employer was getting rid of and can’t wait to finally do something with / trash some of the 6 years of credit card statements I’ve got!

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