My Paperless Personal Finance System: A Work in Progress
To go paperless, you might need a scanner (or some other way to convert your documents to digital files). I also recommend using a shredder to dispose of paperwork. (A shredder is one of the best defenses against identity theft.) Here’s how my current paperless personal finance system works after nine months of trial and error.
Handling income
Having your employer electronically deposit your paycheck for you is the first step in going paperless. This wasn’t an option for me at the box factory. Now, however, I have each of my sources of blog income automatically deposited to my business checking account. This reduces the risk of mail and identity theft, and saves me the hassle of running to the bank.
This business account adds a layer of complexity to my finances, but because I’ve automated everything, it’s not too bothersome. Most of my income sits in business checking for months on end. I make quarterly estimated tax payments from this account (a process that is not automated), and retain some of the rest for other business expenses (read: more taxes at the end of the year). Once per month, I transfer a “paycheck” to my personal checking account at the local credit union. This amount is roughly equal to my former income at the box factory.
Juggling accounts
Most of my “paycheck” remains in checking, from which it is automatically transferred to various monthly bills. (The only bill I still pay by check is the mortgage. The mortgage company wants $11 for an electronic transfer. I’d rather pay 42 cents for a stamp.) The rest of my money is divided among three savings accounts:
- My ING Direct emergency fund
- My Mini Cooper account (at the credit union)
- My vacation fund (at the credit union)
I don’t like having my accounts spread around, if only among two banks. Based on suggestions from GRS readers, I plan to move all my savings to subaccounts at ING Direct, but keep my checking account at the credit union. (I will document this process for an upcoming entry.) Besides, ING Direct pays 3.00% interest; my credit union is currently paying 0.35%!
Paying bills
Except for the mortgage, I’ve set up electronic statements and payments for all my bills. Every month, I receive an e-mail notice from each company that my statement is ready. I verify that the bill is correct. If I were to find an error (none so far), I would cancel the scheduled electronic payment and contact the company to correct the problem.
Most of my bills are set to be paid automatically. I’m wary of my credit card company, however, so I process that by hand every month. I simply log in to the bank’s website, verify the totals, and then initiate a payment.
Processing paperwork
Using this system means I deal with a lot less paper than I used to, but I still receive certain bills and statements by mail because the companies don’t offer any other option. Plus I accumulate the normal receipts through day-to-day living.
I keep most receipts only until I’m sure the bank or credit card has processed the transaction correctly. (Others — for an appliance, for example — I keep on file.)
When I receive any other paper item, such as a bank statement, I immediately scan it and convert it to PDF. Based on reader recommendation, I use the Fujitsu ScanSnap S510M document scanner (Windows version). This is not a frugal option, but it’s damn efficient. The ScanSnap looks and feels like an inkjet printer, but it scans paper quickly and accurately, automatically converting the documents to PDF. (You may be better off using your existing scanner, if you have one.)
After scanning, I shred the original document. I name the PDF something sensible (“200805 – Mortgage.pdf”, for example), and then save it to a pre-set folder. This part of the system is key, actually. Without care, a digital filing system can become just as cluttered as a paper system. It took me several months, but I’ve created a naming convention that works for me.
My hard drive is backed up daily, so I’m not worried about data loss due to computer failure. I would like to create off-site backups, however, so I intend to look at Shoeboxed, a free online tool for receipt storage.
Reconciling statements
Every weekend, I reconcile my accounts. I use Quicken to download data from my banks and my credit card company. I verify that the information is correct, and then think about upcoming expenses. If I believe I can afford to, I transfer money from my personal checking account to one or more of my savings accounts. (I hope to move another big chunk to my emergency fund in the next week!)
I still suspect that one day I will move to a web-based tool like Wesabe or Mint or Quicken Online, but for now I’m happy with Quicken.
My impressions
Looking at this system, it’s clear that I’ve come a long way in the past year. I’m moving closer to the paperless personal finance system I described in August. Instead of retaining a shoebox full of paper every six weeks, I’m now filing just a few pages. After using these techniques for the past few months, I’m very happy with them. They’ve helped me to reduce clutter and save time.
My system isn’t perfect, though. I need to move all my savings accounts to ING Direct. Since registering a couple of business names last winter, the junk mail has picked up again — I need to put a stop to that. And I need to find out if there’s a way to pay my mortgage electronically without paying $11 per month.
Have you moved to a paperless personal finance system? Have you taken steps to automate your finances? How do you keep things organized? How do you manage all of the files and PDFs? Are you worried about data loss?
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There are 128 comments to "My Paperless Personal Finance System: A Work in Progress".
Couldn’t you just pay your mortgage with an electronic payment from ING? Or does the credit union charge for incoming electronic payments as well?
WRT your mortgage payment.
Bill pay at my credit union has an option where you can schedule a physical check to be sent out from the bank. And you can further specify that this is done automatically at a given interval (Say, monthly). They do not charge you for a stamp or postage.
I use this to pay for my rent monthly. It’s quite complicated but it’s all automated:
1) 5 days before rent is due my portion of the rent is transferred from savings to checking automatically.
2) My fiance, who is at the same bank, transfers her portion of the rent into my account, again scheduled monthly.
3) 4 days before rent is due, my bank sends a check to my landlord with a memo I’ve specified.
Now that we’ve got it set up, it’s great, and we never have to scramble around rent time.
Interesting question, John. I’ve only tried to pay the mortgage via the mortgage company’s web site, where they want $11 to do so. I never considered doing it from ING Direct. I’ll have to look into that. My concern is our extra principal payment. We currently pay a few hundred dollars extra per month. I’m not sure how we’d be able to designate that with a “push” transaction. But it’s certainly worth exploring!
Red, does it cost you anything to use Bill Pay at your credit union? Mine charges $5/month, so I haven’t signed up. I’ve been using “pull” transactions from the cable company, phone company, etc…
With the exception of my mortgage payment and condo fee payment everything else is paid online.
You shouldn’t have any problem doing a bigger payment. I currently do that with my mortgage and any extra is automatically applied to the principal.
It’s amazing what these mortgage companies can get away with when it comes to fees. Especially when it makes it easier for them…
$5/month? Wow. My credit union offers a free bill pay option (usually electronic) which we use for our mortgage.
I have finally gone completely paperless. My bank offers free bill pay, so that’s how I pay my mortgage and infrequent medical bills, and the rest I use the “pull” method. I enter all payments into an excel spreadsheet the day I make them, and then wait for them to clear before reconciling to Quicken.
As a former banker, I am not at all worried about data loss. This information is backed up on multiple servers and must be kept on file for 2-7 years (depending on the account type).
Now I just wish that all of the places I do business with would go to paperless billing and statement systems. I really hate getting paper bills in the mail.
@John
ING doesn’t allow you to do billpay. You can only do money transfers with between approved checking/savings accounts.
I’m fairly paperless as well. I use ING checking and am able to “push” a physical check to my mortgage company. If I put “extra principal” on the memo line, it’s applied correctly to my loan. For everything else, I either pay via the company website or ING’s online bill pay.
I noticed you mentioned scanning your statements/documents. Do you have the option to receive these electronically? I receive most bills/statements via email or download from the company website. I think the mortgage statement/bill is the only one I receive via mail. I keep each one until I make a payment and confirm that it has posted to my account.
I use MS Money and it automatically downloads my credit card transactions for me. I keep receipts until I see the transaction has cleared. Then I either toss it (for minor items) or file it (for major purchases). I have almost no paper filing anymore.
my bank provides me with free billpay as long as i keep a certain balance. i pay my rent this way as well. in the last year, i’ve used two paper checks and they were both to friends for sports teams dues because i forgot to get cash before the game. i always carry one check in my wallet just in case.
@mikemc – You may be thinking of ING savings accounts. I am able to use online bill pay as well as send paper checks from my Electric Orange checking account.
My wife and I have been as paperless as possible for years… We use a Bill Management Service called Paytrust. (http://www.paytrust.com) It is one of the oldest online bill management services around, and used to be independently owned and operated but have been acquired by Intuit in the last 2 years. All of our bills are either retrieved electronically by Paytrust, or are mailed to a PO box (unique to us) at their Imaging facility and then presented to us electronically.
If you have an electric orange checking account with ING you can pay all your bills electronically through push transactions and even send paper checks through first class mail to those businesses that do not accept electronic bill payments for free.
savvy wrote: I noticed you mentioned scanning your statements/documents. Do you have the option to receive these electronically?
Out of curiosity, I checked my scanned documents for the year. Turns out I’m only receiving two regular personal items on paper on a monthly basis: the mortgage bill and my credit union account statement. I’m almost positive I can tell the credit union to send me electronic statements only. I don’t think I can do this with the mortgage, but I’ll check.
There are still some irregular items that come by mail — insurance policies, social security, etc. — but most of these are items I’d want to keep the original of anyhow. All of the remaining documents are business-related.
I guess what I’m trying to say is: A scanner may not be necessary for many people.
For backing up scanned documents, I use Mozy Home (http://mozy.com/home). I have it set up to monitor folders where I put the documents, and it backs up the files nightly, or you can force a backup when you’re done scanning. It’s free up to 2GB, which I’ve yet to max out. After that, unlimited storage for something like $5.00/mo. Very nice, and easy to use.
Re: bill-pay fees at banks
My bank doesn’t charge for bill pay if you do it through its website, but it charges a monthly fee if you want the convenience of entering the bill pay through Quicken. But one day I happened to be on the phone with the right phone rep. of the bank, and he asked whether I wanted to request a waiver of the monthly Quicken bill-pay fee. I said, “Of course!” He put in the request, it was granted, and I haven’t had any monthly bill-pay fees from the bank since. I would have never known to ask…. but now suggest that anyone interested give it a try!
I use billpay for my mortgage, which is electronic. When I pay extra principal, I make a separate payment. My mortgage holder sometimes has a problem separating out p+i payment from extra principal when I lump them.
I used to use Quicken to manage my money, but I recently discovered Yodlee and absolutely LOVE it. Yodlee allows you to see all of your accounts real time, from frequent flyer miles to checking accounts. It’s amazing. You also can customize transactions and categories. For electronic file management, I currently used DocumentWallet until it was recently replaced with ReceiptWallet. Both pieces of software are awesome. You should check them out. I’m curious about your file naming structure. Could you share that with us?
For anyone really interested, Wells Fargo has the best online bill pay I’ve found. You can schedule the payments in advance (one-time, recurring, etc.) and the billpay forecasts your balance in 7 days (after it pays your bills), which is very helpful for the financially challenged. You can categorize your bills, too, to keep track of auto expenses, household expenses, insurance, etc. One very nice feature is the “My Spending Report” which tracks all of my spending each month, and I can even categorize my ATM withdrawals and my checks into categories. My Spending Reports tells me my average for the past 12 months, and keeps track of where my money is going. When I sat down to write up my budget, my spending report doesn’t lie about how many times I’ve been swiping my debit card at fast food or pricey restaurants, or how much I’m using the ATM. The best part is you can download it in different formats for your own use.
I even billpay my dad every month, as he pays my car payment and insurance and repay him. I do this so the check is always sent on my pay day, it saves me gas and/or a stamp, and I can pre-categorize the payment so I always know how much I’m spending on “auto expenses” each month.
Wow, your system is very similar to my own, although I use ING for everything including checking and mortgage. Sending checks by mail, and electronic bill pay are all free. I use the heck of ING’s free check mailing and save .42 sents each time I do it. there was a break in time I needed to get comfortable, but now I love it.
I don’t scan documents as I have a decent paper filing system setup, but like you I only get a few things by snail mail and even less needs to be filed.
I also use the same process with quicken, and I am happy to stay there for a little while. I wish ING and Quicken played nicer though. Only 4 of my 12 accounts download when updating from quicken, the rest I need to download from ING.
If you don’t have the money to buy a ScanSnap, but still want to be able to make paper documents searchable you could try using your existing scanner or digital camera in conjunction with Evernote. Evernote can identify and index words in images making them searchable.
Evernote Overview
http://www.youtube.com/watch?v=i_ncr1Ee9e8
We are pretty much completely electronic (thanks to free BillPay) save for a rare medical bill or irrigation that is paid so infrequently. I have a monster shredder and shred everything from the gazillion credit card offers to bank statements and other statements. Many I shred right away once I confirm accuracy as they are available online (past bank statements and ccard statements for example).
Wow JD congrats on the system. Use your ING electric orange account to send the mortgage a paper check and you won’t have to pay for the stamp.
I have to pay my car loan via paper check because they charge for bill pay and credit card payments.
All you do is go into Electric Orange and choose pay by check, put in the amount you want to pay and the address. The send the checks out every month and you can vary the amount if you want or just leave the set amount.
Easy to do and saves you money. The mortgage gets a paper check and you get your ‘auto bill pay’.
What my credit union does, and what I suspect the other free bill pay banks are doing is:
a) The first check goes out on a paper check.
b) The bank notes which account it gets deposited into
c) Future ‘checks’ are not actually paper, but ‘echecks’.
This way the bank isn’t actually paying postage on every bill you pay.
—
For what it’s worth, my blog post today was also about our money system. We do still keep paper copies of bills, but they all say “paid online, May 20/2008” etc. on them.
http://richerandbetter.blogspot.com/2008/05/our-financial-strategy.html
I am very impressed. I would love to get to a system like this. I think most of my reluctance is having to scan documents and create that digital filing system. But it has to be better than having tons of paper.
ING Electric Orange allows you to “send payments”. It later, automatically determines whether the receiver accepts electronic payments or not.
That may be an issue if you need to separate, principal and interest for your mortgage payment.
Now, I’m having a hard time swallowing the $400 scanner. I’m curious, do you use this for anything else other than your new paper-less system? I can’t help but think it’s overkill for monthly scanning of a few docs.
Before I moved out to attend my first year of college, I opened a bank account with Wells Fargo. I knew from the start that I would want everything to be done electronically. I would not be living at home, so mail would either have to be forwarded from home, or be sent to the dorm mailboxes, and who really trusts the people that manage the mailboxes? Ever since opening that account I have moved away from Wells Fargo and onto ING, where I have my checking and savings accounts. The only caveat is depositing money that isn’t direct deposit, so I have to keep my Wells Fargo checking account around for check deposits. My organization for my finances is basically ING for my checking and savings, Wells Fargo with a checking, which I only keep $1 in to keep the account open, and a credit card, because of the high limit and history, and then a Citi credit card that has a good cash back setup.
For automation I really don’t trust it. I like to type in those numbers personally. I only have two bills a month, so going to those websites and clicking a few buttons is not to much of a hassle.
For backup I use a Guardian Maximus. It is an external enclosure that has a RAID 1 hardware controller, which mirrors the two hard drives inside of it. Thus, you get the extra data security. In addition, I have a hosting plan with Dreamhost that offers about 500 GB of online storage, so I am developing a method to compress/encrypt my files and upload them at some sort of interval. This backup plan might seem overkill, but I am extremely paranoid about losing my computer data.
That’s my story, keep up the great blog J.D.
Sounds like you’ve got quite a handle on going paperless, J.D. I’ve begun the process, but haven’t gone completely paperless. Thank you for the encouragement to go ahead and improve the process. I’ve got nearly three filing boxes chock full of old receipts, bills, paystubs, etc., whereas I could simply purchase a small flash drive every year and keep the information backed up on it, stored in a fireproof safe.
On the mortgage company, as others have said, I think there’s an easy work-around. I have a free checking account at Bank of America, which gives me free Bill Pay, and I can either send to a number of vendors electronically, or they will send a physical address to anybody I choose – no monthly fee…
On the subject of ING and higher yield savings accounts, I decided to check if my bank (Washington Mutual) had anything to offer in response to online banks. Turns out they do — their Online Savings product offers 3.25%! Since I was already a WaMu customer I was able to open the new account and transfer money from my existing savings account without any hassle.
Although I didn’t end up opening an ING account, I can say thanks for motivating me to check out my options.
Seeing people use several accounts with one bank for earmarking funds made me want to share a trick I use in Quicken.
Quicken has accounts that you can set up called “Savings Goals”. You can earmark funds and transfer them into these virtual accounts from your bank account. You’re not really transferring the money, it’s just an internal transfer. When you reconcile the bank account, Quicken knows the true balance. You can choose to view these transfers in the register or not. However, if you use these accounts, your cash balance on the main page reflects your balance less what is earmarked, as these funds are listed in the assets section.
The point is, if you have $10,000 in an account, but $5,000 is earmarked for a new car fund, then your cash balance shows $5,000 and you have $5,000 in the asset section under New Car Fund. The problem is, you’re never sure until you click inside each bank account exactly what the balance really is.
My solution was to set up a “Savings Goal” bank account. All earmarked funds are transfered from this account and it is always negative (contra account). That way, I can have as many fund accounts as I’d like, but I always know their total, and I also know how much of my cash in the bank is earmarked.
I use the automatic transfer feature in Quicken to make these transfers, so it’s not something I have to think about. And if I decide to change something or use it for something else, I don’t have to do multiple tranfers with a real institution. My transfers all happen “in house” so to speak.
I hope this made sense.
JD, good work! I’ve been paperless for about 2 years now. I use a Sharp AL-1655CS all-in-one laser printer, scanner, etc. I only keep paper for things that REALLY matter now, and shred or recycle the rest, depending on whether there is anything on the document beyond my name and address.
I use Quicken and reconcile 2-3 times per week. I use my credit union’s free online billpay for any creditors that won’t pull payments. I reconcile paper receipts against Quicken, then toss them unless I plan to claim business expense, in which case I scan, then toss.
I absolutely concur with your point about building an effective folder structure for your scanned documents. I set up a structure that looks quite similar to my old paper filing system.
Backups are a MUST when going paperless. I rotate external drives between home and a lockable flip cabinet at my office, and once a year I stick a year end backup drive in my fire safe. That gives me an excuse to buy a new backup drive 🙂
Last but not least, it’s good to remember that some creditors purge older online statements (American Express, for example) so if you want to keep those for more than a few months, you’ll need to save a local copy. Most creditors allow PDF download, which works well – just save to the local file folder structure along with all the scanned documents.
First off, J.D., awesome site. I’ve been reading your postings regularly for about six months now and find it very practical, which is impossible to find when you read information from the professors, analysts, and “experts” that write for the major publications. Simply, Thank you.
On Bill Pay:
I prefer using free bill pay for every bill, including the one’s available for auto-withdraw. To me, it’s a push vs pull thing. With the convenience of bill pay’s automation features I would rather push (initiate) all my payments/bills rather then all these different entities pulling. It’s consistent so there’s never any confusion on who’s initiating the transaction, plus it offers control if I need to make a sudden change to the payment (bill discrepancy, change in account in which it’s paid from, etc). I was once all auto-withdraw and I had to change accounts. It took me a few cycles and a bit of paperwork to get them to quit withdrawing it and get it back under one system consistently.
On Scanning:
I have a scanner and consider myself on a paperless system. Taxes, birth certificates, etc are scanned and backed up but not destroyed. I don’t do receipts, however, but I am a quicken user I know that starting with quicken 2007 you can attach receipts to transactions. For me, receipts for larger items get attached straight to the item. I used to keep everything in a file drawer but I started to count on the fact that business keep records (EOB’s, Bank Statements, Hospital bills, etc). Retailers, at the store level, are getting better at finding historical transaction as well.
I forgot…using this Quicken tip also means that you don’t feel tied down to one bank because you have 5 seperate accounts there. You are free to follow the rates if you’d like.
JD – consider keeping a savings account that you can access immediately, like your one at the CU. We put our 3-6 months EF in ING, along with our sub-account for general savings. BUT………
If we needed to transfer money in a pinch, we have $1K in a local bank account, and we wouldn’t have to wait 3 days to get it. Now, I know you have credit card(s), but we don’t. We are cash only, which means our “emergencies” are limited to what we have in our EFs. Since becoming DF, we have had to use this mini-EF once, and then we were able to refuel it really quickly. Waiting 3 days to get your money is not an option. If you don’t have check writing priveledges or a credit card (yuck!), keep a local account….
I’ve never been comfortable going paperless. It seems to add too much complexity to do a simple task. I do use MS Money but still write out the few remaining checks by hand.
That being said, I have gone to paying most of my bills either online or with my credit card. Note: I pay my balance in full every month.
I also turn off paper billing whenever possible. This is mostly because my mailman is semi incompetent. My neighbors and I are getting the wrong mail all the time. The less financial info I have mailed the better!
I can’t believe your mortgage company charges extra for people paying them electronically. How stupid is that? It’s actually easier and more reliable for them to receive electronic payment. In the UK most companies actually charge you more if you don’t pay electronically (preferably by direct debit – ie. automatically) and also if you want a paper bill. I don’t like that they do this but it seems perverse to incentivise people to use cheques.
Wells Fargo (and I’m sure a few other banks) offers Bill Pay for free if you maintain a minimum balance or have direct deposit, etc.
Also, WIN2PDF is a free program to create PDF files from pretty much all formats. I use it when I want to save a file as a permanent document. For example, the confirmation page of an online order or other such receipts.
What do people do about protecting the scanned documents? Any type of encryption just worried if someone got they hands on the computer they could have bank account information etc.
I’m in the process of migrating my checking from ING to an account at USAA. USAA’s checking doesn’t have a significant interest rate, but on my checking the amount of interest I get even from ING is almost negligible. Here’s why I’m switching:
1) USAA offers a feature called “Deposit@Home”. If somebody gives me a paper check, I sign it, scan the front and back through the web interface, and it’s automagically deposited. I destroy the physical check and I’m done. (With ING you need to mail in the checks- great possibility for loss and/or fraud)
2) USAA accepts eBills, which ING does not (nor any other bank I’ve had). With eBill, I can tell USAA to automatically pay either the minimum due, a fixed amount, or the entire balance due on my credit cards, cell phone, utilities, and other bills. Most bill pay services only allow for a fixed amount to be scheduled monthly. Not all billers are capable of sending eBills, but lately more have been offering it. Just recently my utilities began sending out eBills (I had previously signed up for a budget plan just so it would be a fixed monthly amount).
Unfortunately, USAA has eligibility requirements. You’d have to check their website to be sure but I believe you must be either: A) active duty military, B) a retired military officer or immediate family member of a retired officer, C) child of someone who currently has an insurance policy through USAA.
(Oh, and they also reimburse ATM fees- trying to find an ATM on ING’s AllPoints network is a royal PITA)
I have a myCash account with Fidelity which has a really decent interest rate, is FDIC insured in a real bank, has free checking, free ATMs everywhere (any fee is refunded), and free billpay. I’m not sure if there is a minimum amount required to have a myCash account as my main investment account is with them.
I think the issue with statements and payments (and pre-payments in my case) with mortgage companies is really something to look out for when shopping for a mortgage. Many people only consider closing fees and interest rates, but pre-payment penalties and annoyances in making easy payments should be considered as well.
I’ve heard of the USAA Deposit@Home feature! I wish Fidelity had that, although I can mail in a deposit or take it to the nearest Fidelity office.
Backups are key!! Hard drives are cheap these days, and it’s easy to get an external hard drive, copy everything over and then store it somewhere secure and away from your home. If you’re extra smart, you’ll encrypt it, too. Be sure to update your offsite backup periodically, too.
I have a ScanSnap, and LOVE it!!!!
Excellent post! I also started looking at automating most of my daily routines after realizing that part of simple and frugal living is by optimizing every aspect of our life.
My system is similar to yours, JD. I receive electronic statements for electric and cable/internet bills, as well as all of my credit cards and bank accounts. The only things I receive paper statements for are quarterly investment account statements, and monthly rent bill (because they charge for water/trash/sewer on this as well). I have the cable/internet company pull from my credit card (to get the cashback rewards on my card), and the electric company pulls from my checking (cuz they only accept checking accts for auto-billpay). For my credit cards, I set aside the money needed to pay the bill, based on my budget, into a high yield savings account. About 5 days before it is due is when I schedule the payment to actually happen, and I put a note in my calendar to transfer $x amount to which account on what date, to make sure I cover that scheduled payment. Yes, it is slightly more complex – but I make about $4 in interest this way per month, along with about $10 cashback on my credit card each month (I pay for everything on a rewards card that I pay off each month). And really, if you’re not doing automatic credit card payments anyway (which I would not advise, just to make sure you’re reviewing your charges), it’s only 1 more step to use the bill pay savings account to hold onto your money until it’s actually due. I used to pay the bill the day it came out – but now I see the advantage to holding onto what is mine until it is actually due.
I am pretty much paperless except for the one or two times a company sends me something via snail mail.
All my bills are sent to me via email since I opted for paperless billing. Since my primary email is a gmail account, they are automatically tagged and filed for future reference. I don’t have to worry about backups since all of that info is on Google’s servers. (Yes, I understand that my account could be hacked, exposing my info, etc. but who’s to say your home PC can’t be hacked and main copies and backups destroyed via virus or malware, scripts, etc.)
As for those 1 or 2 occasional paper bills that are sent to me, most of those can be retrieved online. Therefore, I don’t necessarily see the need for a $400 doc scanner, unless you want to archive old papers as well. However, I do have access to a Fujitsu doc scanner at work, so in that respect I do consider myself lucky.
I use ING for my banking. I do not like that they do not have the specific e-Bill system. My traditional bank is Wachovia. I liked their payment and e-Bill system much much better than ING. But, I have learned to live with the ING way of doing it.
One last thing, if you subscribe to Dave Ramsey’s “envelope system” I have brought that into the modern world by creating an electronic envelope system with ING. They allow virtually unlimited savings accounts. So for every envelope that I normally have, I create an “electronic envelope” (a savings account). Then I automate the distribution of money into those savings accounts when my paycheck hits. When it’s time to pay the bills, I transfer the exact amount out of the savings account, into the ING checking and pay the bill 🙂
Also, as a security feature, I set up one savings solely for online transactions via Paypal. I keep $0 in there until I have a transaction and then I transfer that money into it. In case my Paypal account is ever hacked, all they can get to is my 1 savings account that will have $0 in there 🙂
For the person who asked about file naming conventions, the key is to do year, then month, then day, and to put the date first in the name. Then the filenames will sort chronologically. So 5/20/08 becomes 20080520, or May 2008 is 200805. You can use spaces or dashes to make it easier to read (i.e. 2008 05 20 or 2008-05-20), as long as you’re consistent from month to month.
Online backups – I’ve been using Carbonite for over a year now and really like it. It’s $50 a year for unlimited backup (they’re currently backing up about 40 gigs for me). It has a small piece of software you install that runs in the background. Once a day it checks for new files or changes to files and sends them up. It’s saved me a time or two as I wrote over prior versions of files.
I’m a USAA user too and while Deposit@Home had its kinks at first I now LOVE it. I just scan in my paycheck or any other check and it instantly appears in my account. It took me a while to get used to shredding checks once I deposited them!
J.D. Make sure you ask your credit union if there is a “paper-less” credit. Some of the companies that I get electronic statements from give me a $0.50 credit per month, others have planted a tree for me when I’ve switched.
Lastly, don’t be loyal to your credit union. Mine didn’t give me an option for a no-fee, high interest savings account. The best they could do was reduce my monthly fee to $8.95 per month unless I kept a $2000 balance.
I was tough closing the account because they’re local, courteous, and quick; but in the end I moved somewhere else (ING Direct).
I’d like to second the recommendations for USAA. I use ING Direct for long term savings, but all of my checking and insurance goes through USAA. One nice thing is that when I initiate a transfer from ING to USAA through the USAA website, the funds show up in my USAA account immediately. This solves the problem of keeping your emergency fund in an account with a delay in the withdrawal.
Also, I have been very happy with the Mozy service (https://mozy.com/?ref=4F64C7). I have 2GB of online backup storage for free, and they offer free software on their site to automatically backup folders/files you specify.
@ Chris:
“What do people do about protecting the scanned documents? Any type of encryption just worried if someone got they hands on the computer they could have bank account information etc.”
If you take appropriate cautions, you are no worse off than somebody stealing your mail, possibly in better shape. Put a password on your computer to prevent access, make the screen saver automatically log you out, or require a password to gain access, and don’t place your computer in the DMZ on your router… I’d say you have a better chance of getting your paper mail stolen and looked at than the security of your home computer compromised.
To geek from Post 44, I just wanted to say your idea with the Paypal + ING Savings Account is genius. I am just starting to toy with eBay and Paypal and was reluctant to assign my checking account to it. However, I will now be using your method =).
Everything Online All The Time!!! I’ve been using online banking/bill pay for 5+ years now and as much as possible, have discontinued all paper bills, mail, paper checks, etc. I find it saves me money, time and effort….and it’s just a heckuva lot more convenient!
@ Brad, post 47; I agree about not being loyal to your credit union. When I was making the move to paperless, my bank was still charging for electronic banking and bill pay. I went into my local branch, talked to the manager and asked him about the bank’s plans to eliminate the fees. I also told him that this was a make-or-break deal for me. Not that I’m such a big fish that he’d care, but to my happy surprise, they were indeed going to offer a full suite of free e-banking in the near future. I waited (he was also willing to give me a fee waiver in the interim) and I’ve never had a problem.
Always good to ask!
I am pretty much paperless but I need to look into scanning items that I still get a paper bill for. I have an all-in-one printer with a scanner so I won’t need to purchase any additional hardware.
Definitely go with the sub-accounts at ING. We currently spread our savings across four sub-accounts – emergency fund, vacation fund, Christmas fund, and taxes. We may even add an account for my daughter so she can watch the interest accrue each day (something she has been interested in since our compounding interest discussion last month).
Neat receipts just made a Mac version of their software and scanner. http://www.neatreceipts.com/products/neat-receipts-for-mac/
We use Paytrust, as does #13/Jim. We’ve used them for at least 6 years and I am very happy with their service. They will do EFTs or paper checks, scan any paper bills we[they] get (including insurance declarations, etc), send email reminders, so forth. I can access at least 3 years’ (probably more) worth of documents online, and for a nominal fee will once a year get a CD with all that year’s documents, records. For $10.95 a month it’s worth every penny to centralize everything. I have convinced all individuals we do business with to bill through Paytrust. Medical, any thing like that is paid via CC so there’s an electronic trail. When I get EOBs, and our paper medical bills I scan, discard the paper copy, and file the PDF.
I don’t bother to keep monthly statements from anyone since I have online access to every account I have. If I want to keep a copy of a check, that wasn’t paid through Paytrust, I can go online to my bank and download a check image, and file.
Three pieces of our financial world not paperless are a set of property taxes (for one it’s because the county’s billpay site seems to never be functional), storage of receipts for home improvement, and storage of raw data for taxes ( 1099s, W2s, etc). I have checked with our tax accountant–yes we use one, she’s great– and her take is that the Feds haven’t fully committed to accepting PDFs if you get audited. I would dearly love to be able to scan all that paperwork and ditch the file cabinet!
In our ongoing quest to reduce clutter, I have downloaded or scanned owner’s manuals for our stuff, created an online inventory, with digital images, of our home and belongings. We also created pdf’s of all important personal information and store off site. We do keep paper copies of the most important stuff (will, mortgage, a few contracts) but not much.
PayPal, TextPayMe, etc., are great tools for paying individuals, but if it’s important, an emailed image of a bill or contract is helpful to retain.
I can’t wait until electronic copies and signatures are universally acceptable!
BTW, I have a relatively old scanner (Epson), but the coolness is an automatic document feeder I got on eBay which allows me to scan multiple pages as quickly as a Xerox machine. I also have the full Adobe Acrobat software which allows me to assemble, rearrange and otherwise futz with electronic documents. Both are critical elements of our process. I currently use Record Manager to automatically encrpyt and store the PDFs. A little clunky, though.
skimming the comments it looks like paperlessness is more attractive to men than women (?)….
Have ING mail the bill out for you, as a paper-bill!
One of my banks has an account that also has free bill pay (mailed out, or electronic), but you have to give up going to a teller (actually, you pay a fee if you use a teller when you could use an ATM). It’s part of my slightly too-complicated system, that works pretty well. 😀
Also: Some buisnesses (my work for example) will direct deposit into more then one account! I have mine auto split into 4: Car/budget-pay power; Insurance account; Mortage/condofee/Property taxes account; normal checking.
Yes, i know, I should simplifiy that a bit. 😀
I’m old fashioned.
Paper is more convenient to handle than converting everything to electronic formats.
Ironic, I guess, since I’ve been a techie for almost 20 years.
Paperless is the way to go. As far as your estimated tax payment, you can set them up for eft up to 180 days in advance, see http://www.eftps.gov.
Be careful with receipts! I recently presented a printout of a scanned receipt to Lowe’s for a return–they refused stating that they needed the original (which had been shreaded).
Dan
I moved paperless a year or two ago. Bought a ScanSnap and never looked back. The one thing I would say is make sure you do an offsite backup of your stuff. I use Mozy (www.mozy.com).
To James in Post #50:
I am glad you liked my idea 🙂
The only flaw with that method is sometimes the seller only takes credit cards. For some reason, PayPal cannot / does not do a “conversion” .. meaning that they will not allow you to use the linked savings account for a seller who is only taking credit cards. In that case, I just add my ING debit to my Paypal, wait until the transaction goes through and delete the card info. It’s cumbersome, but better safe than sorry.
Also, Google Checkout is only credit card based, so you can’t link your “online transaction savings account” to it 🙁
I saw at least two others that use Paytrust. I love it. I love it on the level of TiVo and my Apple laptop.
A couple benefits over regular billpay:
You can schedule automatic payments with various conditions. For example, my cable bill is automatically paid 4 days before it’s due if it’s less than $60. More than $60 and it emails me. This is great for when you go on vacation. You never have to worry about bills coming while you’re gone.
Also, with some billpay services it takes the money out of your account as soon as you schedule it. With Paytrust it stays in your account until the date you tell it to be mailed, so you’re earning interest the whole time.
Anyway, at $10.95 a month it would be worth it to use over your $11 mortgage fee.
Does ING take a long time to transfer money between accounts? I am using HSBC and it takes 3 business days to push money around. That’s fine if I remember to start the transaction on a Monday or Tuesday, but Wednesday or later makes it 5 days.
I do get an ATM card though so I can get cash easily if need be, I’m just curious about the way ING does it though.
Keep in mind that if you’re a business that wants to get a loan, they’ll require originals of your bank statements (not copies). Applying for a mortgage (anyone doing that anymore?) requires the same. So if you know you’ll be doing either one of those things, you may want to keep the previous 3 months copies. Not that you couldn’t just go to the bank to get them, but that’s time, $$, and hassle (I know, I had to do it).
I keep all original receipts for returnable purchases (not groceries, etc!) in an envelope for 60 days– you never know when you need to return something. This habit has saved me $$ many times! I purge the envelope periodically.
Hi J.D.!
Thanks for the great post. I too was inspired to go paperless around the same time you started writing about it. I began by purchasing the ScanSnap scanner, and it was money VERY well spent. Man I love that scanner! 🙂
With the ScanSnap, I was able to go back and scan several years worth of brokerage and bank statements in just a few minutes (literally). How cool is that???
I’ve also been taking user manuals from things we own, cutting the bindings off, and scanning those too. 🙂
My journey to paperless is still a work in progress, but I definitely have fewer piles of paper in my office. Everything that comes in now gets immediately scanned, filed and backed up. The only thing I’m still battling with is receipts. They continue to pile up, and I think it’s mainly because I haven’t settled on a personal finance application I really like.
Yodlee is cool, but I don’t think I’m using it to its full potential. I also don’t feel 100% confident having all my account information online.
As for backups, I’m using Microsoft SyncToy (free) to synchronize my electronic documents folder to an external hard drive and to a USB flash drive on a regular basis. The USB is always with me, so it goes offsite when I do.
Keep up the good fight!
Dave
You’re funny JD. My mortgage company automatically takes any extra I mail out from my online bank account and applies it to principal. I only send the mortgage bank a check when I want to apply the money directly to escrow using a payment coupon off of a paper statement to ensure it processes correctly.
I push out most of my bills from my online checking account. It’s great!
For backup, I prefer to backup to DVD/CD and a USB flash drive. Plus I set a password on all the zipped files so nobody can open them even if they are in the wrong hands.
J.D. Just a quick thing on the backups. Check out jungledisk.com Its a great little program that uses Amazon’s S3 Storage grid as the backend. I backed up about 6GB of photos two months ago, when I started thinking that having multiple hard drive backups and DVD’s wouldn’t do much good if the house caught on fire. They split the bill up into different parts, bandwith, and storage. The first month, since I uploaded a bunch, I paid about 75 cents on my credit card. Each month since then, they’ve billed me about 30cents. At those prices, it really is almost cheaper than recording DVD’s, and fireproof! Also, amazon has multiple datacenters they store the data in, which is much better than most other solutions.
and for offline backups I send a copy of the DVD to one of my friends/family. Since its zipped with a password, they wont be able to see it. So that way if the house burns down and I am still around, then I can get to it. I dont have that much of data, only 10 Gigs or so.
@RK: There are plenty of online tools to very very easily remove password protection off of zip files. Just don’t assume that a simple password will protect you too much.
It will slow or stop the casual user though.
I use Schwab checking for billpaying, and it works wonderfully. I have my bill money DD to this acct, it then pays my bills by paper check at no cost to me, plus I earn amazing interest for a checking account(2.01%), while the money sits there waiting to be paid out. Total automation, no cost at all. I have the vast majority of my bills sent electronically. I have an ING, and Emigrant savings accounts.
To my chagrin, I still use a brick and mortar bank account for business use. Mainly because I haven’t figured out how electronically deposit cash, at no cost- into an internet account.
I suppose I could just use the local bank account as an intermediary/clearing house to then transfer the funds to a more legit account- not sure if it’s worth the hassle at this point.
-Jeff
No paper income. All my pay stubs from work are emailed to me as PDF files. My net income is direct deposited into my checking account, and my Simple IRA contribution is skimmed off the top (pre-tax) and transferred to my brokerage firm.
All my bank accounts are consolidated under one roof: ING Direct. I have an Electric Orange checking account, and two ING savings accounts: “Emergency Fund” and “Fun Shit.”
Through ING, I have a couple of things set up. I have set dollar amounts automatically transferred from my checking to my two savings accounts on regular intervals. I also have ING’s paper check system automated to send my rent check to my landlord’s PO box a week before it’s due. I asked my landlord if she was cool with me using ING’s electric check feature, but I would need my landlord’s account and routing numbers, and she was understandably not comfortable with that. So that’s one piece of paper I’m inadvertently still dealing with.
All my bills are paperless. The ones that are a fixed rate are set to auto-pay: Verizon Wireless, Netflix, etc; the variable ones must email me to request online payment: San Diego Gas & Electric, Chase CC, etc.
Also, I use Mint…mostly because it’s shiny and I like the graphs. I got an email from them recently announcing that they’re going to start supporting investment accounts soon. That’s good news for Mint users.
J.D.,
Shoeboxed is the easiest way to get all those receipts digitized so you can easily organize them. If you want to try out our Receipt Mail-In program, visit us at http://www.shoeboxed.com. Anybody out there with any questions about it, feel free to visit the site or call us at (888) 369-4269.
Thanks,
Dan Englander
Shoeboxed.com
FYI, this site, once authorized, will receive all your paper mail, scan it and keep it online for you. All you do is login and red your mail:
http://www.cnn.com/2008/WORLD/asiapcf/05/21/lost.parrot.ap/index.html
Interesting idea .. not sure if I have that much trust yet.
All,
I am almost all paperless! All of my bills are electronically paid either through my bank or my credit card which I then pay off every month. My paycheck and investments are directly deposited or debited as well.
I recently purchased the Scanalizer with Neat Receipts and have found it easy to use but I wanted to know if anyone had a good system to go paperless with receipts? Both my wife and I are self-employed so we save all our receipts for business expenses.
Thanks,
Scott
Only tangentially related to the topic, but a perfect example of large corporations not really getting the hang of being Green… I have “paperless” billing from Citi for my CC. Every month the USPS drops a letter in my mailbox from Citi containing a note informing me my paperless bill is ready for viewing.
We also do all our bill paying using our CU’s Billpay (ncsecu.org). Would need to see if we are paying anything to do that.
And is ING paying %3 on a checking account?
Back again! This is so interesting, and has definitely gone to another level of discussion!
Quick comment for Mac users: don’t forget that from the “Print” menu you can choose “save as PDF” or “Fax”. I have used both extensively and am very happy to have those choices.
I would really like to be able to use tags with my pdf documents. Any thoughts? I guess you could use complex titling (date/tag1/tag2) but gotta be an easier way.
Am I right: Quicken for Macs does not allow attachments?
Finally, any USERS of ShoeBoxed?
Thanks JD, for getting the ball rolling!
You can also set up automatic drafts for your bills with the companies themselves i.e. cable, electric etc …. That’s what we’ve done and it saves the extra step of having to go online and pay each bill every single month. (The drawback is that we still receive a paper invoice every month so I guess we aren’t technically paperless).
I like your system: it’s simple and clean. While I do have all my accounts in one institution, because I tend to use separate accounts as “piggy banks,” I actually have too many accounts–it’s a nuisance to reconcile them all each month.
The only bills I pay with checks (except for the lawn dude and an occasional service call from a repairman who can’t take plastic) are Visa and American Express. They could be paid electronically, but I want to actually see, physically, each charge in a given billing cycle. Just don’t trust credit-card companies, and feel too uncomfortable about the possibility of identity theft to allow those payments without my approving each item.
Otherwise, my pay is deposited electronically and all other regularly recurring bills are automatically paid online. Payments from clients usually come as checks, which I do deposit at the credit union in person, to be sure they’re put into the right account.
About going paperless with receipts: it seems like it would take for-freaking-EVER to save all that stuff to disk. I stash tax-related receipts in a separate file; keep what I call “junk receipts” for two or three months (in case I need to return stuff) and then burn them in the fireplace, which is a lot faster and easier than shredding them.
Sorry for being off topic
@Philip I still think the Winzip password(actually passphrase) will hold up for atleast 20 years.
Try this password and see how long it takes to crack: “25 Biscuits Sat In Tree!!! Then I had Lunch With Thee, Zork#” I looked here http://lastbit.com/pswcalc.asp to confirm
They tell me it will take 1.5590072938048415e+24 years, assuming no part of the file is readily readable. So I guess it will do fine for me.
Sorry for being off topic again.
Any Neat Receipts users here who can tell me what kind of format the scans are in? The Fujitsu that JD uses gives me the warm fuzzy feeling by scanning into PDF which I can read anywhere and feel moderately confident I will always be able to read.
Everything I see written up about NR talks about some export abilities but it’s bad enough to have to go through one scan/convert process to go from paper to digital. If I have to do something else periodically to be in a portable format I probably just won’t end up doing it…
I’ve been totally paperless for while now and very happy with it. Also my bills and bank and credit cards statements come in PDFs file to my email.
WRT the mortage: JD, most banks now offer free bills payment. For example, my checking account is with Citibank and every 28th of the month they send out a check to my landlord with the rent amount. For free. With Citibank if you actually set up 2 (or 3 I don’t remember) automatic payments like that, the checking account is free of costs. You should check into it and get a secondary checking account for your bills payment eventually.
If you start an ING electric orange account, you can have ING mail a check to your mortgage company
@Jay
There are a couple of ways to tag files within OS X. The most universal way is to add tags to the spotlight comments for your pdfs. Just “Get Info” on the PDF file, and type in tags in the comments field at the top. The main benefit is that they will be spotlight searchable, which is very handy for retrieving documents later with common tags.
Another option would be to use a File Organizer software package like Together from Reinvented Software, EagleFiler, or even Leap. These will help automate and organize files, folders, and tags.
Good luck!
Ah hah! Thanks, David! One of the missing pieces = FOUND!
I finally broke down and started getting my bank statement via email. The reason? Because my credit union (Boeing Employees Credit Union) began offering a “Member Advantage” interest rate for those members who:
1) Set up Automatic Deposit;
2) Used the Bill Pay service; and
3) Used E-Statement.
The 7.5% interest (yes, it is only good for the first $500 balance, but how often do I get to keep more than $500 in my account? Not often) was enough to get my attention, since I already use Auto Deposit and Bill Pay, and now I have one less document to file or shred each month.
I am fairly paperless. I pay all of my bills with Wells Fargo billpay. There are a few items I get in the mail that I can’t figure out or haven’t looked into how to get via e-mail such as our All State statements and proxies and such from stocks and mutual funds. As far as a daily back-up. I have been thinking about this for a while, but I just haven’t acted on it. I do manually back up things such as pictures on mediamax.com. I am also considering HP’s website, upline.com.
@ Jay
I’m a Shoeboxed user! Actually, I have two Shoeboxed accounts — one for myself and one for my band.
All it really came down to was time. I didn’t have enough time between two kids, work, and the band to scan all my receipts. Unfortunatey, I don’t have the money to pay my accountant to either.
The site is pretty cool. It’s easier to find my receipts than anything I could set up. What I like though is Mail-In. I send receipts that they scan for me. Then I can just pull them up online, whenever I want to. It saves me SO MUCH TIME!
It’s such a relief.
Oh yeah, you can tag stuff too, Jay. With the “shoebox” labels.
Rock on!
My paperless system works pretty well and is free. I pay no fees to pay bills online and I even save the cost of stamps and envelopes. I have expanded it beyond basic personal finances to include every type of paper that I would have dealt with in the past. The initial conversion & scanning of documents is cumbersome but once that is done it is a piece of cake.
Hardware & Software Setup: PC, Plustek portable Scanner, Adobe Acrobat, Quicken, Syncback, 10-sheet oval cut shredder.
File Storage: Two basic folders, one for ‘keep forever’ records with folders for subcategories for Mortgage, life insurance, medical records, etc. The other is by year & then subdivided into Statements, Receipts, Taxes, Paychecks, Medical Insurance, etc.
Statements & Receipts: I download about 80% of my statements online from each account in .pdf format. If it is not available in .pdf then I use Acrobat & print a statement to a .pdf file. For those few accounts that do not provide any online information I scan the paper statement. I only scan receipts that are for items with warranties. All other receipts go onto a receipt spike and get shredded after a couple of months.
Paying Bills: I have most of my utilities setup for automatic bill pay directly from my checking account, except for the cell phone. I don’t trust them given the number of occurrences where people receive bills for multiple thousands of dollars by mistake. I will pay credit cards & a few others directly on their websites with an EFT from my checking for free. For the many misc, other bills my bank M&I Bank offers free online bill pay. I think I have only written about 5 paper checks so far this year.
Data Backup: Every evening Syncback backs up my data from my computer to a common computer we use as a file server. About once a month that data is backed up to an external hard drive which is kept in a very sturdy fireproof safe. Near term upgrade will be to encrypt all the data & upload to a secure FTP site on a more regular basis.
I used Neat Receipts. It is great software, and the lightweight scanner is awesome. I am turning everything from statements, letters and everything to pdf’s. Previously used Paper Master Pro before this, but this software seems to work better than that!
Jumping back in!
HIB: check the Allstate website, you can make payments there, but not sure about ebills. Paytrust receives ours.
Colin: thanks for the ShoeBox info; I’ll be checking them out for sure.
All this info is so great!
I initially started using Neat Receipts but it just seemed like too much work for a at home application. I guess it is worth it if you have to search back through your paperwork on a regular basis.
Exporting the information to pdf files was a pain. I guess it is really meant more for business applications since all your data & images are embedded in a database.
I also was bugged by the size of the installation & frequent updates. It takes up a lot of hard drive space & the updates can be upwards of 100meg to download.
I’m pretty close to paperless. I only keep the papers that I think are absolutely necessary. Anything I think I can get away with a copy of I’ll scan to PDF and reprint if necessary.
I pay all my bills through Bank of America billpay (where my primary checking account is). It’s easy and free. And I like being able to look and see how much I’m paying for everything, when the last time I paid a bill was, etc. Just makes it simple at the end of the month. I get paid on the 26th and within a few days I’ll sit down for maybe 10 minutes and pay all of my bills.
I keep PDF copies of everything. When I hit submit on a payment in billpay, I print the confirmation page to a PDF. I also save all of my statements and bills as PDFs. Most of which I grab from the company’s website. My apartment complex sends me a paper copy that I scan. I think that’s the only one I scan. I do get a couple of bills from companies like T-Mobile who refuses to stop sending me paper copies even though I’ve asked them to, but whatever … I just download the PDF from their website and shred the paper copy when it comes in.
As for my savings, I have a certain amount that is automatically pulled from my checking account on the 30th and put into ING savings. Then on the first Tuesday of every month I pull a portion of the savings out of ING and put into Sharebuilder – part of that pull goes to a Roth IRA and part to my “fun” account for stock trading. Both accounts automatically invest in a pre-determined set of stocks.
Finally, to address the backup situation I use Carbonite. It’s online backup that costs about $50 a year for unlimited storage. You simply download a small app that runs in the background all day. You tell it which files/folders to back up and whenever one of those files changes or a new file is added to your monitored folder, it gets updated to your account online. If your computer ever crashes you just log into your account online and re-download your files. It’s even handy for the accidental deletes, as all files that you delete are kept in storage for something like 30 days. I find that very unobtrusive, easy and fairly cheap.
Wow, just finished reading the comments. Really surprised more people aren’t paperless. I’d go crazy if I had to go back to paper. I enjoy only spending 10 minutes a month paying bills. Plus I never knew where anything was when I kept papers. Now I can find any document in a few clicks.
By the way, I use Mint.com for financial tracking. And once a month, I put my monthly spending habits into a custom Excel document that I use to tell me whether I’m sticking to my budget. It’s just a little more powerful than the options on Mint. Love Mint, though. Was always too lazy to input stuff into Quicken or MS Money and didn’t like the delay involved in downloading the transactions. Just need something quick and easy. Oh, and free is good too.
Here’s my question for you: What’s the point? How does this make your life easier.
Don’t get me wrong. I really enjoy this site, the innovations, and really enjoy reading the different perspectives…but I still question the value here.
I’ve considered this option several times, but I’ve chosen to opt out of receiving any statement at all, and where that’s not possible… I use a hard copy filing approach. In fact, I’m considering simplifying even more to a system where all my hard copy bills are filed in one file.
Reason for this approach, I never reference these statements. I know it is good to keep some backup…but I have only needed to reference these files once or twice in the 15 years I’ve been gathering these statements.
Even the time to rename the scanned file seems excessive to me. So again, I’ll ask…
What is the true benefit here to paperless? How does this improve your life or save time?
Thank you.
Great question, Dominick. The point is that: a) the system reduces clutter and b) its saves a LOT of time.
By saving only a few pieces of paper, I’m reducing the space needed for files. I’m also reducing the piles that generally fill my desk and office. So long as I don’t allow my digital files to become cluttered, it’s easy to keep these documents neat and ordered.
Most of all, this really does save time. It’s almost impossible to convey how quickly the ScanSnap does it’s thing. There’s no time involved at all really. I open the bank statement, put it in the scanner, press the button, and the info appears on the screen. I’ve added five seconds, maybe ten, to my workflow. It’s that easy. But that time is made up quickly whenever I have to pull an old document. I’d bet that it takes me less time to scan and shred a statement than it does for you to file it. It’d be a very close race, at least.
Finally, I’ve opted out of paper statements whenever possible. Like you, I’d rather not have to deal with them.
Are you sure ALL the companies you´re e-saving reports on accept that?
what if they don´t?
imagine, for example, that your cable company wants to charge you again for something you´re already paid and you have your pdf file to prove you already pay that… what if they say they can´t establish if that file has been modified thus they require the paper document?
get it? I don´t know if it´s well explained, english is not my native language.
Greetings from Peru, South America.
Dominick: There are several reasons.
#1 Electronic is easily searched and moved. My house can burn down and my documents are secure. To replicate that you’d need a safe deposit box.
#2 Search-able: I can actually search for the past 10 years every single time I purchased something from one particular gas station.
#3 Identity theft: What is there to steal? Mine is encrypted.
#4 It really is faster. If you have a good scanner, it takes no time at all. In fact, I rented an ADS and we ran through a friends deceased parents recoreds. We put stacks in and scanned them in a matter of hours. It was faster to scan and search than try to sort it all by hand.
#5 Do it for your kids. See above statement.
I use a combination of a ScanSnap (the sub $300 model), HP New Media Center (less than $300), and a paper shredder.
I use credit cards to auto-pay most bills and my account with Wells Fargo shifts money over immediately to make sure I am not paying interest on those bills.
I like using a credit card for a couple reasons. My credit card is essentially a conduit. Since I almost always pay it off, I am not paying much interest.
I get the card benefits as well. Do the math. Your one free flight a year is probably more than your interest bearing checking is paying.
Most card benefits are the total purchased, not how long that debt is held. Interest bearing checking does not have this advantage.
The benefits are if there is any disagreement, it is far easier to get your money back through a dispute with your credit card than if you cut them a check. If it comes down to a junk-yard fight, I can get a new credit card number issued to stop payment and then easily put in my new numbers to my existing accounts.
Why the scanner if most of my stuff is online? Document creep. I read many paper articles and often find something I want to keep. I simply cut it out with a razor blade and scan it.
If you tend to hoard documents/magazines/newspapers, this is an easy solution.
I have all of the stock tutorials tips from IBD for one year scanned in and they are text searchable.
For receipts alone and the tax benefits, I see the scanner as a must have tool. When you calculate the freedom of not having all the paper lying around? That to me is near priceless.
I have a local backup along with Amazon’s S3 service. Even if you scan in EVERYTHING, you’ll find that your documents take up less than your last family vacation digital photos.
Just out of curiosity, why are you saving things like mortgage statements in the first place? When was the last time that you needed to reference it?
All the information should be available online (assuming that your loan is with a major lender and not Bailey’s Bank). All you really need is the one statement every year that shows your interest payments for tax purposes. Hell, my mortgage payment is drafted automatically, and I don’t even remember the last time I opened the statement.
(This also circles back to Juan’s comment above: Everything is handled electronically now for anybody who’s charging you for anything. I think to a certain extent, you have to trust in the reliability of their systems. I used to scour every paper statement that came into my house, matching up charges and payments. Life’s too short to worry whether someone overcharged me $10 somewhere.)
Also, any respectable financial institution should provide free online bill paying these days.
Scanning documents is definitely the way ahead.
How does the ScanSnap & other scanners handle multiple pages with text on both sides of a page? I have an old-school scanner and I’m looking to upgrade to something w/ a document feeder on it so I can set it and forget it. Anybody? Thanks. ~Jason
Here is how I wrangle up my paper statements. I probably should think about throwing these things away because I never use them 2 years out. At any rate, I can understand how maddening organizing finances can be so I’ve tried to go paperless from the start. The lady at the post office can’t believe I don’t pay any of my bills by check. Why would I?
I’ve also been using shoeboxed.com for a while and I really like it so far. I used neat receipts once upon a time but just could never keep up with it … now i can be laxy and just mail those suckers in.
Reply to Que: Even if you go paperless, don’t neglect to review your bills when they come. I work for a major wireless provider, and have at least 1 phone call per week from someone who has auto pay, and never looks at the bill, then months later, wants to know why they are being charged a certain charge that was billed to them months ago, or for several months, before they realized it.
Mistakes can happen – check your bills – then file ’em, “shoebox” ’em, whatever…but LOOK at them!
Agree with Que! I would never keep monthly statements. What’s the point? Review and trash. Since most businesses, esp. financial, have electronic records, you’re not going benefit by keeping your own copy.
Educational and legal, gotta have the originals. Same with investment PURCHASES and raw tax data. Sounds like warrantees, so forth, might also demand original receipts, though larger businesses have electronic records of purchases, especially if you pay with a card. BTW, I like the idea of spiking receipts you only need for a short time.
So, for us, electronic filing boils down to personal data you don’t need the originals for (all the medical record keeping stuff, DMV, insurance, manuals, small time original contract info such as CC offers, communications and letters you might need, etc.) and home improvement and auto repairs/maintenance receipts (in case we decide to sell either). We are narrowing down what we personally have to save by directing ALL billers to send invoices, notices, all paperwork, to our Paytrust account. Paytrust scans, retains, contacts us as needed, and provides annual discs of all events.
I’m also exploring the option of having service receipts and the like either faxed or emailed to us.
I used to be paperless back in the early days of scanners (3 pass for color), when one cost $1000.00 and visions of the ‘paperless society’ were bright and clear. I used a product called Papermaster which allowed you to scan and store documents in filing cabinets complete with folders. It was an awesome product, but the biggest drawback was that the images were some proprietary type that you could not view without Papermaster. It may have been in the pre-PDF days.
I suffered the indignity of having a major HD failure and could not retrieve my info. Of course, as fate would have it, the backup I was relying on did not do so properly (early days of CD writers), and lots of records were lost forever. Since then, I have not gone paperless.
I recently bought a ScanSnap document scanner as I was fed up of spending so much time searching for paper documents. Time is money, so I calculated it would pay for itself in not much time at all.
Anyone doing this should definitely ensure they have a good backup system in place though, otherwise they’ll get truly and utterly screwed when their hardware throws a wobbly.
Another vote for Mozy. I’ve also used Jungle Disk, but Mozy is easier and cheaper.
I have a scansnap and love it. I got my 510 for $125 from a company liquidating. For those who’ve mentioned the issues with backing up your docs, I can recommend Mozy as well. It’s an online service, free to 2 GB. You basically set it to auto place your docs online. Unlimited storage is only $5 a month. I back up all my critical documents, email PST, and some settings. All my music/pics/other stuff is on a RAID and/or NAS.
When I scan documents, I do it at work (with permission). My department’s high-end scanner/printer accepts hands-free stacks, and does duplexing, in no time.
As long as I do it on my own time (lunch, staying late, etc.) they don’t mind, since I’m not actually consuming any goods.
When you say review & trash your monthly statements, I hope you mean review & Shred them. You don’t want to make it easier for ID thieves.
i would also recommend yodlee moneycenter. (moneycenter.yodlee.com). they aggregate all your accounts in one place, show you balances, and even transactions for some accounts, always up to date. it is a nice way to get a true picture of your finances at any given point. hopefully they will eventually create an interface that is good enough to reconcile transactions and do all quicken-like tracking online.
I use Shoeboxed and I’ve been really happy with it. I’ve had some probelms with receipts in the past and they’re pretty friendly over there. You can just call them (888 369 4269) and they’re pretty nice. bunch of guys that are up a pretty much all hours of the night too.
Great article.
One site that I always see mentioned for online money management is Mint, but not too many people talk about Yodlee. I was a user of mint over a year ago and I know it has now grown a lot more, but Yodlee is extremely powerful, a lot more than Mint, but I will say, it is not as pretty. I would look into it before making a decision.
moneycenter.yodlee.com
What about protection on your PC?
I also receive electronic statements and scan in others but I store them in an encrypted folder on my hard drive.
I also use a program to securely move items and securely “shred” items on my machine.
My view is that it does little good to compile a giant depository of your data in electronic format if you don’t protect it well.
For starters, you may want to hit a web search and check out the Windows programs Cryptainer and Eraser.
Just food for thought.
Thanks for the great blog!
I already use the steps you mentioned.
Sometime back I came across Yodlee’s website. I use Yodlee (http://moneycenter.yodlee.com) instead of my Personal Money Software (Microsoft Money) for reconciliation.
Nice blog.
I strongly urge investing in the ScanSnap scanner. The problem with every scanner before it is that they are slow and likely require a prescan – which means you WON’T DO IT. The ScanSnap is very fast, and about as slow as I could stand to run a paperless system, but I love it. Just get it and don’t look back.
A new and interesting book “Paperless Joy” that addresses paperlessness from a fresh perspective has appeared. Is this the future?
http://www.paperlessjoy.com/
Would highly recommend Shoeboxed.com.
They auto-categorize receipts now as reported on LifeHacker
Paperless here!
I have a local bank (Regions) for my normal checking and ING Direct with multiple savings accounts. All transactions are done through their Web sites.
My paychecks are direct deposited. I use a virtual envelope-style spreadsheet using Google Docs, so I can access it at home or at work.
Early in the morning each payday, I see was direct deposited. I “give every dollar a name” using my spreadsheet. I pay the bills that are due the following week. “Extra” money is transferred to ING Direct.
“Doing” my finances (and well) takes me 10 minutes a week.
I pay my bills through their respective Web sites, except for my water, which would charge a $1.50 fee. I resent that, so I use my online billpay to send them a check at no extra cost to me.
Reconciling is no sweat. I make sure my spreadsheet shows same amount as the bank’s Web site. That is easy, because I take cash out of ATM each payday for food, fuel, and fun — using envelopes (thanks, Dave Ramsey). So I have no need to write paper checks (which are costly) or swipe my debit card. I therefore have no need to wait for pending transactions to clear.
None of my bank accounts charge me a fee of any kind, so I’m well organized and am saving money.
Please check out our solution at http://www.pixily.com. Send us your paper documents and upload your electronic documents as well. Then, you can search ALL of your documents from your secure online account. All text in your documents is searchable and you can also apply multiple labels to them.
Any updates since this post was written?
Have you updated your system at all? Are you still pleased with how it is working?
I absolutely love being paperless! My filing cabinet is down to one half of one drawer for the entire year and that is only for all the one-off payments I have to make. The end of the year process is much smoother now that everything is on my computer. I just have to make sure I back up every week!
It looks like some of the issues you are encountering when you file could be solved by using software to keep track of your files. You can try The Paper Tiger Filing System to help you better keep track of your files. Give it a try! We are a BBB A-Rated business and are always looking for ways to help people file!
Good article. Interesting that I also scan all my documents. In fact I’ve all my cheques and bank statements dated back to 1986. Yes, it took me a while to scan everything.
My actual bank statements and cheque images are available to me at my RBC Internet banking site in PDF format, so I just have to download them to my ccomputer every month.
Now you may also want to protect all these files on your computer and for that I would recommend TrueCrypt, which is an open source app, which can encrypt your whole HD or create TrueCrypt drives.
But don’t forget your password or you data will be lost forever.
http://www.truecrypt.org/
cheers..