5 Easy Steps to Organizing Your Financial Life: Part 5 Be Prepared

April 17, 2012 by

Organize Your Financial Paper Series:    Use the documents gathered for filing your income tax return in Part 1 to prepare for emergency in Part 2, to set financial goals and plan ahead in Part 3.   Part 4  helps you  build a budget.

5 Easy Steps to Organize Your Financial Life Papers Part 4

What happens if you find yourself without any of the paper work that proves you are who you say you are?  That proves you own your car, house and furniture?  That gives you access to  money and financial resources?  That connects you to medical care?  Lack of documentation was one of the biggest obstacles in managing life for survivors of  Hurricane Katrina.  Wildfires, floods, hurricanes, mud slides are only some of the causes of quick evacuation with very little warning.  What would you grab if you had fifteen minutes to leave and did not know if there would be anything left of your belongings if and when you return?

I do not want to be an alarmist by any means – no worrying, obsessing over possibles, potentials and what ifs and how comes.  The goal is to have already put together a compact, easily transportable set of documents for you to grab quickly that will help you regain your life and deal with circumstances in the best way possible in case of disaster.  Just in case. . .   .  and just because it is smart to be prepared.   It is so easy because you’ve already done most of the work.

Scan and print or copy everything needed for your Go Packet.  Use electronic or phone storage as backup, but do not count on them being your first source of information.  You may not have access to computers or even electricity.  If there is no electricity to recharge phones, you will want to save them for communication only.

Go Packet papers will have only one use. Remove papers from it only to replace with a more up to date copy when there are significant changes and you will never have to wonder “is it all there” at a most inconvenient time.   Keep originals of difficult or costly to replace legal papers in a safe deposit box or other very safe place. If you haven’t taken care of that, plan to do so now.   Keep a binder and/or file for copies of all your documents, including those in your safe deposit box, so they are convenient when needed for reference.  If you’ve been following along in this series you’ve completed this task and can use copies of those to start your Go Packet.

The advantage of the Go Packet  is that everything is in one compact lightweight bundle, that can be stuffed in a backpack, purse or pocket.   You want to have it with you at all times during an evacuation.  Store the papers for your Go Packet in watertight bags or small container.  I used gallon zipper freezer bags.  Put the papers folded in half in one bag, zip it shut and put the whole thing in a second bag which is also zipped closed.   Think carefully about where you will store it. Where will it be most convenient to grab quickly?  In a “go bag” in the coat closet along with such emergency items as flashlights. . . taped under the kitchen drawer next to the garage door. . . in a brightly colored well marked file in a drawer. . . . in an emergency kit in the lowest level

A Checklist for your Go Packet is here.  Add any other critical information that applies to your family.  Some additional tips:

When you create a list of extended family and friends, include anybody you want to contact for help or to let know you are okay. Here you will find  Contacts list in Excel  to type and print.  Or here  is a Contacts list in Word to print and fill out. (See bottom of post for more options.)  Full name, phone number and address.  Don’t count on being able to remember something you know well, when you are under stress.     (Bonus tip:  put a copy in your glove box. You know how you drive to someone’s house by turning left at the big church and right at the first pizza place?  You’ll have the address when the pizza place becomes a golf speciality shop overnight and you get lost some fine day. Just sayin’ !)

Forms filled out in   previous installments of this series can just be copied and added to your Go Packet to save time.  You could instead compile a collection of any recent statements or bills that include your current address, the contact information for the institution and the number of your account.  However, using the forms condenses that information to keep it easier to transport and to manage in a disaster.  They include, with links to blank forms from this series:

Personal Information Manager (from Part 1)

Financial Information Manager (from Part 2).

Insurance Information Manager  (from Part 2)

Legal Information Manager  (from Part 2)

Plan Ahead –Debt  (from Part 3)

A Go Packet is something you hope you will never have to use.  However, even if you do nothing else, this one step toward preparing for possible disaster is a positive thing.  It can save a great deal of emotional distress and hours of frustration, should you ever have to use it.  In the meantime, the peace of mind the Go Packet provides is worth the investment of time and energy.

July 5, 2012 – Added these editable tables in Microsoft Word for your convenience.  Right click and choose “Open Link in New Tab”.

Family Information with Contacts

EMERGENCY CONTACT INFORMATION Editable

CONTACTS Editable Table

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Organize Your Financial Life: Plan the Life You Want

March 29, 2012 by


5 Easy Steps to Organize Your Financial Papers Part 3

Part 3  Plan the Life You Want: Getting Started by Setting Financial Goals

How to lead the life you want to have.  It only takes a bit of financial planning to shape things so that our life is lived proactively and we can have more of the things we want.  We all get thrown a curve ball now and then, but if we’ve thought ahead it will be easier to respond to the unexpected.  Planning helps us get the most for our money on a day to day basis, even if we are currently living pay check to pay check.  When we look at the overall financial picture, it is easy to see how each financial decision affects other areas.  We are better prepared to make intelligent decisions, adapt to changes as we enter different stages of life and to set regularly updated priorities for our finances.  It is the road map for our life’s journey.  An interactive map that lets us build new and exciting roads when we choose!

You can complete the first step quickly.  Begin by determining what assets you own.  Print and complete the Plan Ahead Assets form (directions are included).   Secondly, determine the debts you owe by using the Plan Ahead Debt form.  This is new information that you will find on the last statements you’ve received in each area or other records.  When both forms have been competed, subtract the Debts owed from the total Assets.  This is your net worth –  the departure point on the map.

What you do with that figure depends on your life stage.  Fresh graduate with a new job or just married, your goal is likely “To grow net worth” to pay student loans, to save for a home, to start your family.  If you have children, your goal is likely “To maintain balance” in providing the life you want for your family while saving for experiences, education and retirement.  Empty nesters may have “To facilitate a lifestyle change” either through retirement, a second career, or travel as their goal.  Goals are not carved in granite.  They will change with circumstances.  And to make the best decisions, you’ll need to have adequate up to date information.

The good news – you already have most of the information you need!

 

Remember the Insurance Manager Form  and Legal Information Manager you used to create an In Case of Emergency file?   They get a new use.  Pull them out and make a copy to use in this process.  (You’ve already used the Financial Information Manager in determining your net worth.}  Don’t forget to replace the originals in your personal I.C.E. file!  Use the copies to complete the Financial Goals Worksheet.  Directions are included.

And just like that you have direction for the coming year!   Now that you have the basic information gathered it will be very easy to keep it updated so that you can tweak the goals you’ve set.  And you can live the life you want to live,  instead of drifting aimlessly!

Next week we’ll take a look at another use for the information you’ve gathered and discover ways to help achieve those goals.

This post is Part 3 in a series on 5 Easy Steps to Organize Your Financial Life.

Part 1 -  Preparing for  Tax Time

Part 2  – I.C.E.

Part 4 – Build a Budget

Part 5 – Be Prepared

If you want to explore this topic in further depth, there are tons of books, websites and other information specifically on financial planning.  At some point, depending on your situation, you may choose to work with a professional financial planner.  They will ask you to bring with you much of the information we have already gathered, including the goals you’ve just developed and the budget built in Part 4. 

 

 

 

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Organize Your Financial Life Part 2 — I.C.E.

March 20, 2012 by

 

5 Easy Steps to Organize Your Financial Life Papers Part 2 I.C.E.

Whenever we travel by car, Wheels adds a pair of rubber boots to the cargo.  Weather insurance, he says.  If he has them along, it won’t rain.  You have to know their twisted sense of humor to get the laugh out of that statement that he and Bytes do – but it has worked!  Wheels has never had to wear those boots.   Our topic today is like the “boots in the trunk”.  No guarantee of sunny weather but you’ll be prepared – and everyone hopes those preparations are never needed.

In the first post in this series, I told you we would use the information gathered for tax purposes for several other things as well.  First of all,  that nice neat pile of tax papers from that post is going I.C.E.

In. Case. of Emergency.   Most of us, if traveling for a year, would likely leave instructions with people at home in case something drastic happened to you, your family or property at home while you are gone.  We don’t have to be gone for a year, for drastic things to happen – so neither should we put off thinking about theft, accident, illness, disasters.  By taking a half hour of your time, you will make it easier for those who will have to handle your affairs to find crucial information in a time of stress.  It can also be a help to you or your spouse, and if children are a factor to consider,  equipping the adults in charge makes their lives less disrupted.  And if it is never used . . . . it is still a good way to spend half an hour or so because we will use that information in other ways, too!

What we will do is prepare a collection of documents for someone else. A trusted friend, an attorney, relatives are logical choices.  It is not necessary to give this person all of your specific information, but they do need to know where to find that information in case of emergency. So easy to do when you have already gathered original documents for taxes.  We will pull information from those documents, add a bit more and you’re prepared.  Next we will use the information you’ve gathered for this step to set financial goals in Part 3 and to develop a budget or spending plan in part 4.  Part 5 offers tips for building a go kit from this information, if you live in an area where evacutions happen because of wildfire, floods or hurricanes.

  • Look at the W2s for the full name and social security number of each employed person. You can use Personal Information Manager  form to record this, as well as the name and contact for each employer. Be sure to add the phone number of immediate supervisors. Add birthdates and other information as directed for each member of the family.  If you travel, add passport numbers, driver’s license numbers and auto tag numbers.
  • Insurance information entered on the Insurance Information Manager Form.  If health and/ or life insurance is through employer, note also human resources phone number. Add Long Term Care Insurance and disability insurance if you have them.   If you did not itemize, you may not have used this information for taxes, but it is still crucial for your emergency person to know. Include auto and renter or home owner’s  insurance information.
  • Health Information –.  If you had enough expenses to claim on taxes, much of this information will be at your finger tips. If you didn’t, the good news is that you likely only have one or two doctors to add to the Health Information Manager.  If necessary, complete a page for each member of the family.   (Pets, too.)
  • Financial records –The 1099’s received from brokerages, IRA accounts, banks  for tax purposes will have information on the institution and account numbers for your investments and income.  Add your checking account, 401K or other deferred compensation account.  Here is where you will find Financial Information Manager.
  • Legal Records – Powers of attorney give  someone the authority to act in your behalf.    They are often drawn up at the same time as wills, living wills and medical directives. All are generally kept in the attorney’s office.  You can also write letters of instruction, containing additional information, to be given when power of attorney is used. Some people choose to make their financial information available in this way, depending on their situation.  Note these documents on the Legal Information Manager form.

Now you know what types of documents are needed.  Your particular situation will determine if which specific information you need.  Newlyweds with no children, renters, no medical issues and no investments can copy their W-2 information add work contact numbers, write down their doctor’s name and phone number, copy one each auto, renters insurance,  bank statements, health and life insurance information and be pretty much done.  Others of us will have more complex situations.   Use only what Information Manager forms are needed to fit your situation.

You can mail a set of the completed forms to your designated person.  I used to leave a sealed envelope with my mother, who lived several hundred miles away, and exchange it whenever something in our situation changed.  Now son Bytes has the sealed envelope.  You can scan copies of the completed Information Manager forms and share them electronically,  using USB drive or cd, save them to a shared file or online storage to which you both have the password.  Choose whatever of a dozen different methods meets your comfort level.  Although I do almost everything electronically,  I personally think a hard copy for your designated person is essential, as a back up just in case there is an electrical outage or other problem when the information is needed.  (Just because it will likely be needed promptly!) Either ask them to print out a complete set of the information and store it in a safe place or provide them a copy.

Whatever you do, hang on to a set of copies for yourself.  We’ll need that information later!  Stay tuned for the next installment!  Each post builds on the work done from the previous posts.

 Part 1 – Preparing for Tax Time

This Post is part 2 – In Case of Emergency.

Edited to add these links:   Setting Financial Goals  Part 3,  Build a Budget   Part 4,  Go Packet for Emergencies  Part 5

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Organizing Your Financial Papers – Part 1 Preparing for tax time

March 8, 2012 by

5 Easy Steps to Organize Your Financial Life: Part 1 Prepare for Tax time

Part 1 -  Preparing for tax time

Running a family is very much like running a business. We make projections,  purchases, plans and provisions for the future.   In order to do those things,  we need basic financial information.  Without it, we are operating in the dark, missing who knows what opportunities.  Every family needs to know:   what are the sources of our income and how much does each source provide, what is the total expenditure of our financial resources and where is it going, how are we going to manage income and expenses  to maximize our finances.  Each family needs plans for emergencies and for the future.  The basics of all this information can be found in the material gathered for tax preparation.

If you gather information as you go along and as the year end paper work comes into the house, tax preparation flows smoothly. Even better – with just a little more work, I can show you how to use tax information as a foundation for all of the other important family financial functions!  You get a whole lot more for the time invested in gathering tax documents!  Makes it even more worthwhile!!!!  And exciting – well, almost.  So let’s get started —-and check back each of the next few weeks for more information.

First – designate a catch spot for those documents to support itemization**  on your tax return. If you know you will not be itemizing, don’t worry about this step. In general, if you do not have mortgage interest, property taxes, large charitable contributions and/or high medical expenses, you likely will not be able to itemize.  However, your situation is unique to you.  If there is even a remote possibility that you will itemize, avoid the headache and save the receipts.  You can’t claim what you can’t document!

Designating one place to collect information throughout the year will save time and energy.   Recipts for medical copays, charitable donations (those bags you drop off at Goodwill, statements from nonprofits, etc), property and real estate tax receipts – all those things that can add up to a larger refund.    You can use an envelope to catch them, a box in a drawer, a basket on the shelf, a drawer that holds nothing else. I like to have a way to enclose those little pieces of paper to keep them from drifting out and getting lost.   Whatever you use, keep it some place that is easily accessible.   Drop those receipts in the minute they come out of your purse or pocket.  You can sort them into categories or not as you save them — the important thing is to hang onto them and to have them in one place.

Right after Christmas tax documents begin to arrive and continue through the month of January.  Every piece of paper that comes into the house with tax information goes directly into your designated spot.  Add to it any information your tax preparer requests or that you know you will need for your particular situation.  I like to keep these separate from the itemization papers.   For several years, I stored year end tax papers behind a little chest that sat on my kitchen counter where I could stash papers together and unseen.  An advantage of keeping these papers separate is that you can tell very quickly what documents have not yet arrived.

If you receive statements electronically all you need is a designated file on your computer. Again,  add documents to your designated files immediately as they become available to you.  We get a mix of paper and electronic statements, so I choose to print the electronic statements and add them to the file.  This reduces the chances of forgetting something when it is time for actual tax preparation.   Adding information to your main file as it comes in only takes a few seconds each time,  but  will save you a huge hunk of time hunting them down at tax time.

By the end of January, you should have received income statements from each of your particular sources of income.  There should be a W-2 form for each person in the family who works outside the home.  There should be 1099 statements from banks and other financial institutions, miscellaneous income sources, unemployment or social security, any place from which you received income.   You should have 1098 statements for expenses such as student loans and mortgage interest.  These will vary depending on your particular situation.     Statements are required to be furnished to you and to the IRS by law.  You should receive them automatically.  If you don’t for some reason, then you know you will have to do some followup.     Add the itemization documents, which you have  sorted into like piles, and any other documentation that pertains to your situation.  You will also need the full name and Social Security number of everyone in the family and direct deposit information for your bank account.

It gives you and your family a huge advantage to do your own taxes if at all possible.  It is not that difficult – although we can all think of a dozen other things we would rather be doing!!!!!   The EZ forms are just that — very easy and if you are eligible for those, you can certainly handle them yourself.   There are a number of software programs that are quite easy to use for many, if not most,  tax situations.   They do all the calculations for you so very little math involved.  They are designed with questions and prompts to accurately assess your situation and produce an error free tax return.  If you have an unusual tax situation in a particular year, it is certainly worth paying someone else to help you find your way.  It can also be helpful to hire someone if you have a number of different investments or other complex situations.  A professional will stay abreast of changing laws and can save you money in the long run.

Whatever method you choose,   every person who signs the tax return needs to be involved.   If one person does the actual preparation using the “married, filing jointly” designation,  it does not give the other an excuse to ignore the whole process.   Nor does it matter the size of the family or the number of wage earners.  The information that goes into preparing for taxes  gives  an understanding of the family  financial situation in a very concrete manner.  It is information that is crucial to family well-being.

 Click here for a list of some documents needed for tax preparation.  Your situation will determine which specific documents you will need from this list and may require some that are not listed.  I am not a tax expert, so it is  only  a general guide.   And —- will become the foundation for the next steps in this series.  Tax time can provide invaluable information about your income, many of your fixed expenses and an opportunity to review and plan ahead.  And can provide the basis for other financial actions and decisions.

** If you do itemize and wonder what value to place on donated items, go to  A Pinch of Joy on facebook and click “like”.  This will give you access to exclusive free downloads.  Just added – a list of common items and their donation value for you to print.  If you find it helpful, please share!

Part 2 – In Case of Emergency – tips and forms for others to help with your affairs in case of emergency.  Going through the first two steps will help with the next steps.

Part 3 Plan the Life You Want – how to set financial goals. Use the information you’ve already gathered to help you determine how to fund your dreams.

Part 4 Develop a Spending Plan — tips and forms for setting up a budget.

Part 5 Be Prepared — tips and forms to prepare a go kit in case of evacuation for natural disasters, such as flood, hurricanes or wildfires

This post was featured at diy home sweet home

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