Use system in
paying bills

As the tax deadline nears, now is a good time to get a handle on organizing receipts and statements. Even if you use Quicken or automatic bill-paying, there is a hard copy of a bill to file.

Some people merely put each month's receipts and statements into monthly envelopes. If that works for you, great, but I found that system lacking because I still had to sort through documents at year's end.

While there is no "one size fits all" system, here is what works for me. I prefer to sort as I file using a shallow (about 5 inches high) accordion file. I don't do well with deep pockets as they become black holes.

Here are steps for a simple system, using the acronym B-I-L-L P-A-Y-I-N-G:

» Begin by setting up a regular place to pay bills. Have checkbook, pen and calculator handy.

» Invest in a shallow accordion file to hold paid statements. Mine has 21 pockets and costs about $21.

» Label each pocket, using front pockets for things such as bills to be paid, payment books, bank deposit slips, and receipts. Then label by name of account payable, in alphabetical order. Save the last pocket for Income Tax Deductions.

» Leave all unpaid bills standing upright in the first file pocket or place in a certain spot on your desktop, in order of due date.

» Place all tax deductible receipts in the last file pocket. This will simplify receipt gathering at tax time.

» Always review your bills to check for accuracy, staple multiple pages and circle due date. If possible, pay bills immediately to avoid handling them again.

» Yearly, after finishing your tax returns, bundle up the contents of your accordion file (statements needed to support your tax figures) and place in a large manila envelope labeled "Tax Supporting Documents for (year)." This clears your file for the current year.

» If convenient, use automatic bill-paying services offered by your bank.

» Do Not leave bills or statements loose around the house. Place them all in your bill-paying system.

» Get a grip on your spending. Be selective about what you buy; the less you buy, the fewer bills you'll have to pay!

By setting up a simple system, you'll be able to find what you need at tax time. See you in two weeks!