Friday, May 7, 2010

The Binder System: The Lazy Girl's Guide to Paper Organization

Don’t you just hate filing cabinets? I especially hate metal filing cabinets. It never fails that when I buy a new one it gets all bent up and won’t open. If you leave a drawer open and you bang into it, you might as well just toss it out. I also can’t seem to get the dang hanging folders to stay on the tracks. If the drawer isn’t packed full, they get all cock-eyed, and fall off. If the drawer is packed full it is hard to get things in and out. Not to mention, when I pull a file out there are all these loose papers that go flying everywhere. UGH! And, what is up with calling it a cabinet? They are drawers. Really, I think filing cabinets are the most inefficient “cabinet” ever designed.

About two years ago I finally reached the end of my rope with all the paper lying around the house. We had so many different areas where paper used to get tossed. I was lucky to find the bills when it was time to pay them. Wherever the paper landed was likely where it would stay, but maybe it would be tucked into a drawer or in a pile if I had to do a quick cleaning job. I had a filing cabinet that was organized, but papers just never seemed to make it in on a regular basis, and often they would be taken out and not ever put back.

When I finally got fed up with this system we were in the process of trying to get our finances under control and this “system” wasn’t working towards that goal. Although there are many websites out there that I have read since that suggest using a binder system, I hadn’t started my homemaking journey yet and hadn’t read any of them.

How I came to this flash of genius (ahem) was I decided that I needed all the bills in one place all the time. Call it divine inspiration or whatever, but I had the idea of using a 3 ring binder I had laying around. I probably got the idea from using a binder at work for instructions when I used to work as a temp. It hadn’t occurred to me to use it for personal filing through. I started off simple. I just put a clear sleeve protector in it for every bill we owed. When I received a bill I would stick it first in the inside pocket of the binder. That way I would at least know where the bills were. Then on bill paying day I would go through the bills in that pocket, pay them, and put them in their sleeve. Today I have graduated to a little more evolved system, but to start out, that was a simple solution to a monster problem that was costing us in late fees.

Since I started my humble bill binder I have read many homemaking websites that have examples of the binder system. I have used ideas from all of them and have come up with a system that works well for us. My husband has found that he REALLY likes the binder system. When it is time for him to do the taxes he can just grab the tax binder and find everything he needs without having to pull loose papers out of a file cabinet which may or may not work.

Today I have switched over almost all of our files to binders. I do have a filing cabinet in our storage area, but even that is going to go the way of the dodo very soon. I also have a file box under my desk that I am clearing out. I have two more hanging files to sort through and turn into binders. This has been a slow process for me because I create a new binder as I have the time and the money.

Here is a detailed explanation of the system.

The Binder System

The system is very simple. Instead of using a filing cabinet with hanging files and folders, your book shelf is your file cabinet, your binder is your hanging file, and separators are your manila folders. You can use clear sleeve protectors to further separate.

Here is the list of binders I currently have.

  • Banking and Investing/Expenses and Bills (They could be a different binder but I have a really big one and I don’t have to get into it too often because I do most of our bills and banking online now)
  • Legal and Confidential (this goes in the safe, I will copy some important info out of other binders like copies of our 1040s, list of account numbers and passwords, etc)
  • Taxes
  • Employment (current employer info, resume, references, training certificates)
  • House (title, purchase agreement, insurance, maintenance records)
  • Medical (This is getting too big. I am going to create a binder for each person and have a separate one for medical bills, health savings account, and insurance)
  • Home Business
  • Home Journal (Everything I need for homemaking.)
  • Home School (I have one for each child and one for myself where important docs like our school registration, copies of our letters of intent, and grades go.)
  • I also have personal ones for myself for Girl Scouts and Lay Ministry Training, worship band, and our church website)
 The list of binders that I will be adding to our collection is:
  • Automobiles (insurance, maintenance records)
  • Air Force Records (for my hubby)
  • Education for my husband and myself (this might be combined with Employment since they are closely related)
  • Manuals and Product Registrations
Inside the Binders

Inside each binder I use separators. They act as a manila folding file would. Using the tax binder as an example, each year is separated as well as business, personal, property. Within the section for 2010 I will have a sleeve for receipts (only the ones used for deductions, not every purchase we make), statements, forms, and instructions.


My desk has shelves and on one of the shelves I have all the binders. I labeled them with my label maker and can literally just reach forward for the binder I need. When I am done I close it and put it back on the shelf. I never have to get up; I never have to remember to put the folder away. If I want to take it somewhere else in the house or out, I can just grab and go. If I do get REALLY lazy and don’t put the binder back, I can easily close it and place it on the shelf if I am doing a last minute clean-up. All my papers will be exactly in the order that I left them.

If you don’t have space directly on your desk for this, find a small bookcase you can place very near your desk. The key is to have it at arms length or as close as possible. You don’t want your storage space clear across the room or in another room completely. The binders would never make it back to their storage area and you would end up having a huge mound of binders instead of papers.

Inexpensive Solutions

Binders can be relatively expensive. I was surprised to find out that they can run upwards of $8 for the really good ones. I shopped around and found that Wal-Mart, as usual, has one of the best deals on singles with no sale, but you can find them on sale at certain times of the year at office supply stores or at the bulk discount stores. I also have found that sometimes I can find them at the Goodwill or Salvation Army for practically nothing, but you have to keep your eye out for them and buy them ahead of your need. You won’t ever go there and find what you need when you need it. That’s just the rule. Dollar stores might also be a good place to check, but I haven’t been to one in a while.

Back to School sales are always a good time to pick up sleeve protectors and section separators, but if you find that you are short on extra money, cardboard works just as well. It really isn’t about what your binder looks like; it is about it being functional. If all you have is a binder and no fancy stuff for the inside, just punch holes in all the papers. You can organize it later. You will at least have everything in one place.


You can customize the system to fit your needs. One thing I enjoy doing is using the binders with clear pockets on the front. I use scrapbooking paper or wrapping paper and insert it. That takes away the cold office look and brightens up my shelf.

You could also have your kids create some original art that would go along with the title of the binder. For instance, a picture of your home for your house binder or a picture of their doctor for your medical binder would add a nice touch. Let them be creative for you if you don’t have the time.

Mailbox to Binder

One of the reasons I started using binders was because I had papers lying all over the house. The binder system didn’t solve that totally for me. I had to decide what to do with the papers before they made it into the binder. I am not the type of person who files away everything the moment I get it.

How I solved this issue was with a HUGE basket on my desk. I read the mail, looking for items that need to be taken care of ASAP and then place everything into the basket. The kids are also in training to put everything they bring home into that basket. Every other week, when I have my office day (we are paid every other week), I sort through the basket, file everything away, balance my check book, consult the budget, write out correspondence, and do all those things you do on office day.

Lazy and Organized

My favorite part of this system is it allows me to be lazy and organized. I have just had to come to grips with my laziness and create systems that compensate for this weakness. No matter how hard I try, I can’t seem to eliminate laziness from my personality completely. The other part of my personality is to have a desire to be organized, and I also actually like to organize, just not on a daily basis. So with the binder system, I can be lazy and toss the papers into the basket, but stay organized by taking one day every other week to organize. Officially I am not being lazy because I am following the system I have created to stay organized. That allows me to feel better about myself.

I know, I am head case, but you have to find a way to live and be content with who you are.

Cash Windfalls

In Financial Peace University, Dave Ramsey discusses what to do with cash windfalls. A cash windfall is any amount of money that you receive that you didn’t expect to receive. He suggests that you plan for a windfall before it ever happens. As an example, if you get a cash bonus from your employer you should have already decided the allotment: 10% to tithe, 10% to savings, 10% for fun, and 70% to pay off debt. This way, you will never be left wondering where the money went.

I can’t tell you how many cash windfalls slipped through our fingers. Tax returns, bonuses, even refunds from school loans which we should have been putting back towards the loan, somehow, poof, they were gone. Of course, there was no “poof” to it. It was all about our irresponsibility, but it sure felt like “poof” at the time.

Even after taking Dave’s class, we thought we had everything under control. We were on a budget, we were paying our debt off, and we had pretty tight control on the money we spend. However, we really hadn’t kept our emergency fund as plump as we should have. We had funded it a couple of times, but the last time we used it, we didn’t make an attempt to refund it. And, can you believe it? An emergency happened! Go figure. Actually, two car emergencies happened. We hadn’t been saving long enough to have much of anything in our car repair fun so we had to dip into our tax return money. Before we knew it, it was gone. We had been hoping to use it to replace our flooring. I’m glad I waited to tear out the floor until we actually had the materials in the house.

So here we are again this year. Our emergency fund is low again because we just haven’t had time to build it back up. Our tax return should be pretty significant this year. What are we going to do with it? Here is the formula that we have devised to keep us honest with the money.

  1. Bring emergency fund up to date. (Min $2000)
  2. Purchase something off of our necessity list (curriculum for the kids next year is at the top -- we have a fund, but started it late and need a lump sum).
  3. The rest will be put into our unemployment fund.
You might ask why we have an unemployment fund. If you have followed Dave Ramsey he says that baby step #3 is to save 3 - 6% of your income, however, in our experience, that is nearly as important as getting debt free. My husband has been laid off twice in the last 5 years. He is a computer tester/developer and now works in the health care industry. We are so worried about what the future holds for his company. We cannot loose another job with nothing in the bank. With the first job lay off we used every dollar of severance and every dollar of our 401K before he found another job. The last lay-off he had no severance because he was a contractor and unemployment wasn’t even enough to pay our mortgage. So, if this happens again, and it is like that it will at some point, we are going to be as prepared as we can be. We are still aggressively attacking the debt, but we made room for the unemployment fund all the same.

The floors will be waiting until there is enough in the housing fund, which at this rate…?

Take some time to talk with your spouse about how to allot your windfalls. Don’t leave it until the cash is calling you to spend it. Through the year we think of many items we think we “need” or at least we think we would like to have. By the time we get the windfall we have so many that we just lose sight of the end goal: to be debt free. If you are like us, create a list to keep with your budget. When you review your budget, decide which of them you should create a savings fund for, and which you should put on your wish list. Maybe more money into the debt snowball is the most important item on your budget. When those windfalls come, know exactly how much you need to put towards your funds and how much you can use for your wish list.

No matter what, keep in mind your end goal. If it is to be debt free, let that guide your decisions on how to use your windfall.