It’s that time of year again – time to empty out my bill folders and reset my Due Bills system for the new year.
I detailed my Due Bills system a few years ago here and here, and I tend to share it each year at the end of December. The key part of the system is the monthly folders, and the only adjustments I have made over the years is the method in which I track bills as they come in and record payments and the dealing with receipts and money spent.
Here is a brief overview of my Due Bills system:
- Stand-alone hanging file folder box
- 12 manila folders labeled for each month
- Tax Documents folder – label for 2018 (or the year for which taxes will be filed)
- Basic monthly-style calendar
- Record sheet for due dates, amounts, confirmation numbers, etc.
- Two envelopes – one labeled for Medical Expense Receipts 2019 (or current year) one labeled Keep Receipts 2019 (or current year)
Before the new year starts, I set up the file folder box. In the front of the box, I have a folder labeled Tax Documents for all incoming tax documents I am expecting (more on this below).
In each monthly folder, I include a printed record sheet. I fill all the folders at the beginning of the year so I am not scrambling at the beginning of any month. My Medical Expense and Keep Receipts envelopes start in the January folder and will migrate to each folder as the year progresses.
Beginning of the month
By establishing a routine, I ensure bills are not misplaced,forgotten, or payed late. At the beginning of each month (or even at the very end of the previous month) I do several things:
- Check all account balances (Checking, Savings, HSA account, credit cards, loans, etc) and record at top of record sheet (I check all balances periodically and include four columns for updated balances over the course of the month).
- List all recurring due bills (name, due date and amount due if known). Bills like internet, utilities, mortgage and car payment typically have the same due dates each month, and this makes planning easier.
- On calendar, add due bills on their due dates. I highlight in yellow (my Due Bills color) so I can scan the calendar quickly and due dates stand out.
- Move any unpaid bills from previous month’s folder to current folder and list on record sheet. Things like subscription renewals or even tax payments that have a few months to pay would be handled this way.
- Pay all bills due before the middle of the month. If I am sending a check, I record the check number on record sheet. For online electronic payments or over-the-phone payments, I record the confirmation numbers. I also note the date payed for each.
- For any bills that have a paper statement, I record date payed, amount payed and either check number or confirmation number.
Middle of the month
Our bills typically are due in two waves, at the earlier part of the month (before the 15th), and close to the end. Any bill due on the first of the next month, I list as a payment due at the end of the previous month – this ensures it gets payed on time. For example, my mortage due the 1st of every month, so the paper statement goes into the previous month’s folder so it gets payed in the second “wave” of bill payments I make.
Sometime between the 15th and 20th of each month, I sit down and recheck all account balances, and then pay all outstanding bills for the month, following the same steps listed above.
While many bills are recurring, we do occasionally get one-time statements in the mail. For these, I add to the folder as soon as they come in, list the due date and amount on the record sheet, and immediately list on my calendar. Examples of this type of bill would be medical bills and magazine subscription renewals.
Autodraft payments are recorded on the record sheet, along with the due date (date it is expected to draft) and the amount. I regularly check my bank account and as I see autodraft payments clearing my account, I note the confirmation number and mark it as payed on my record sheet and calendar.
Some bills are quarterly or once-a-year – these I file in the month they are due, list on that month’s record sheet, and mark on the calendar. This ensures that something due six months in advance doesn’t get lost or forgotten.
While I typically only store bill statements in my monthly folders, I will include certain non-bill items that come in, such as reimbursement receipts (i.e. for work travel) or financial statements (i.e. investment accounts, HSA accounts). If I need to refer back to a certain financial statement, I can usually remember what month it came in and retrieve it quickly.
I like to have a Taxes folder at the front of my box to collect any documents as they come in. Tax documents, ranging from various 1098s to our W2s start arriving early to mid-January, but I won’t sit down and prepare our taxes until closer to April when I am sure I have received everything. After tax season is complete, my filed and printed tax returns will go into this folder, and it will move from my bill box into my regular file drawer with previous tax year records.
In the past, I have just kept all receipts that come in, and sort through them at the end of the year for anything of importance. As you can imagine, this approach is unwieldy. Even saving all receipts and sorting at the end of the month gets overwhelming and cumbersome.
Now I check my receipts throughout the month, typically every couple of days. Most receipts are groceries, fuel, or consumables that won’t be returned, and so they go into the trash or shredder.
For HSA-eligible expenses, I put those receipts in the Medical Expenses envelope. I have an HSA-linked debit card and when I buy eligible items, I try to separate my purchases at the register so I get a receipt that only contains HSA purchases. These, along with any receipts from dentists or therapists (receipts for payments made in office) go into the Medical Expenses envelope. At the end of the month when I am getting ready to move into the new month’s folder, this envelope migrates over (along with any unpaid bill statements). **Statements for medical expenses that have been received and payed stay in the monthly folder – at the end of the year, these statements will be combined with the Medical Expenses envelope.
While most receipts can get tossed, if the receipt contains something of higher value or something that has the potential to be returned (like an electronic or hardware item) – these receipts go into the Keep Receipts envelope. Examples of items that I would want to keep a receipt – electronics and video games, hardware items, light bulbs (because I usually get the wrong type!). If a warranty issue arises, or I need to exchange or return an item, the receipts are available with minimal searching.
The Medical Expenses envelope and the Keep Receipts envelope starts in the January folder and migrates each month to the current month.
Due Bills Record Sheet
My record sheet has been a work in progress over several years, as I figure out what works best for me. For example, I know I need to check my main account balances a few times each month, so my record sheet includes four undated columns at the top of the page to track my balances throughout the month. Below my account balances, the remainder of the page is for Due Bills – with columns for Date Due, Date Payed, Amount Payed, and Confirmation (here I list check number or any confirmation number when paying online or over the phone).
For anything that is scheduled as an Autodraft, I write the autodraft date as Date Due, and when the payment has cleared, I list this date as Date Payed and either check off or include a confirmation from my bank statement, if one is available.
One thing I am trying (emphasis on trying…) this year is tracking all our spending. Earlier this year we had two fraudulent charges on our credit card – the issue was quickly resolved but it got me thinking about how I track (or don’t, to be honest) our spending each month. I updated my record sheet to include all of our cards that are ever used for expenses, either online or in person. Ideally, as receipts come in, I will list the date and amount for each transaction. I didn’t include a space for purchase details – like a check book register – my intention is merely to have a basic record of purchases that I can cross check with my credit card or bank card statements to see if anything unusual (i.e. a fraudulent purchase) has appeared on a statement.
I am including the record sheet that I use – feel free to use the PDF or grab the Word file and modify to suit your own needs.
End-of-Year Wrap Up
Each year at the end of December, I wrap up the current year by combining all the documents into a single file folder labeled for the year. If for some reason, I need a statement for a previous year, I have a single location to search.
Starting with the January folder, I lay out all the financial statements received, as well as the January record sheet onto my table. Going through the remaining months, one folder at a time, I sort all my financial statements into these separate stacks. All record sheets are in one stack, all car loan statements in another, all water bills in another, etc. Any medical bills that were received also are placed in a single stack. The Medical Expenses receipt envelope is then included in the medical bills stack. For the Keep Receipts envelope, I do one final review – if a receipt is for something that at this point in the year won’t need to be returned (lightbulbs from February, for example), now it’s safe to toss. Hardware and electronics stay in the envelope and it gets kept with the record sheets. Each stack is clipped with a paper clip or clasp and all the year’s records then go into a single file folder. The current year is wrapped up and Bill Box is ready for the new year!
This system works! I’ve been doing this for several years now with only minor modifications, and it keeps me organized and our bills payed on time.