Get organized via spring cleaning

USA Today (Society for the Advancement of Education), April, 2006

Spring cleaning should go beyond mops and brooms. Arm yourself with folders, labels, and bank statements. Mike Sullivan, director of education for Take Charge America, Phoenix, Ariz., a nonprofit credit counseling company, says organizing your finances can help you save money and get out of debt.

"When you don't track your charges or pay bills on time, you run the risk of falling deeper into debt," Sullivan warns. "You can avoid overdue charges and other fees, and potentially save hundreds or even thousands of dollars, by getting organized."

The average American has between five and 10 credit cards, which means he or she has between five and 10 credit card statements flooding the mailbox each month. Add that to seemingly countless credit card offers and it is easy to see how finances can get jumbled. No wonder household debt soared nearly 32% with more than 2,000,000 people filing for bankruptcy in 2005. Sullivan has suggestions for getting those finances back on track, so you do not become one of the millions of consumers who will file for bankruptcy this year:

Ditch the shoebox method. Tossing receipts, records, and bills into a bottomless pit increases the likelihood they will be passed over and not paid. Use files or stackable drawers and label each creditor. This will decrease the chance you will forget to send in rebates and credit card rewards. Moreover, file all of your tax-related information separately. You do not want to be scrambling for a year's worth of documents minutes before filing your own taxes or visiting an accountant.

Create a monthly budget. Know what you are spending and where. You may recognize small purchases that add up over time, such as fast food and coffee breaks. Reducing those can help save money, which can be used to pay off credit card debt or other bills. This can be accomplished by keeping a record of each expenditure for one month.

Set up a bill-paying system. Set aside a specific day each month that solely is for bill paying. If you mail bills, schedule this time at least five days prior to due dates. You also could consider setting up online bill paying.

Read your bills. Do not blindly pay the total amount due. Look over the documents for mistakes and fraud. Call customer service if there are questions.

Shred old records. Organize the clutter by throwing away documents that are not needed anymore. ATM or credit card receipts can be tossed if they match your monthly statement and are not necessary for tax purposes. Paycheck stubs are not needed once the annual W-2 arrives. Furthermore, tax returns older than seven years can be disposed of (just check with your accountant first). You also should shred old credit card and loan offers.

Stop the clutter before it comes. If you thought it was impossible to avoid enormous amounts of credit card solicitations, think again. You can opt out of most of them by calling the credit bureau's hotline at 1-888-5-OPTOUT.