I'm swamped with paper. This is partly because I'm a packrat, but mostly it's due to the never-ending bills, statements, receipts, policies, and special offers that flood my desk. The paperless office once seemed like a silly goal to me, but lately it's become a holy grail. Spurred by Leo's adventures in minimalism and my own desire to get rid of clutter, I've begun to explore ways to move my money into the 21st century.
Here are eight ways to begin moving toward paperless personal finance:
- Reclaim your mailbox. Use OptOutPrescreen.com to stop credit card and insurance offers. Stem the tide of junk mail with the Direct Marketing Association's mail preference service. Cancel unwanted magazine subscriptions.
- Consolidate accounts and close those you no longer use. Reduce the number of credit cards you carry. If you have bank accounts at multiple locations, combine them at a single bank. The fewer accounts you have to track, the less paper you have to deal with. (Be aware that closing unused credit card accounts will cause a temporary ding to your credit score.)
- Use electronic billing. If you have a choice between paper and paperless, opt for the latter. Not only will this reduce clutter, but it can also save you money. I save $2/month through electronic billing for my auto insurance. Now I'm considering whether it's worth the $5/month cost to sign up for electronic billpay through my credit union. When I calculate how much I'd save on stamps, and count the $2 I've already saved with my insurance company, I could move to completely electronic bill payments for a net cost of $1/month.
- Computerize your checkbook. For years, I've used Quicken to balance my checkbook. This is probably normal for young adults, but many of my middle-aged friends still balance their checkbook by hand. One couple I know began using Quicken to track their finances this summer, and are blown away by how easy it is to use. Even a simple spreadsheet can reduce the amount of paper you're shuffling.
- Photocopy documents. I have a friend who, at the end of each month, photocopies his financial documents and places them in a three-ring binder. He's been doing this for years. While not quite paperless, this is a great option if you don't have access to a scanner. It sure beats my stack of shoeboxes!
- Scan receipts. My accountant uses a $900 scanner that automatically converts documents to PDF files. You don't need anything so fancy. My sister-in-law scans her receipts and bills and saves them to her hard drive as jpegs, vastly reducing the amount of paper she keeps on hand.
- Use the web. Online apps offer smart ways to track your finances while reducing clutter. Due.com is a web-based personal finance program with a community element. Shoeboxed lets you scan or photograph your receipts and organize them online.
- Know which financial records to keep (and how long to keep them). Purge your archives. For years, I've kept every financial document that comes into my life. I literally have dozens of shoeboxes in storage filled with financial documents, most of which I no longer need. By learning which documents you need to keep, you can be sure that you're not storing useless paper.
Paperless personal finance isn't without its pitfalls, of course. Keep the following best practices in mind if you decide to pursue this route:
- Backups are important. Have a system to protect yourself in case of theft or hardware failure.
- Avoid digital clutter. Don't let your physical mess become a digital mess.
- Check for errors. Remember to always review your bills and statements to be sure they match your receipts.
I plan to utilize several of these ideas. I've already opted out of most junk mail, and I already use Quicken to track my accounts. Now I'm going to sign up for electronic billpay through my credit union. I'm also going to begin scanning bills and receipts, converting them to PDF.
I may not be able to eliminate all paper from my life, but I'm going to give it a try!