10 Post-Tax Steps to Getting Your Finances Ship Shape

Piggy bank

Was tax day a nightmare for you this year? Did you end up digging through piles of unorganized paperwork just to file a 1040EZ form? Did you realize how little of your income was deductible?

If you answered yes, perhaps...just perhaps...it's time to get your finances in order. Plus, there's the added advantage that getting organized will help you reach your financial goals.

How can you tell if you need to get your papers ship shape, other than the fact you spent endless days on your taxes with no tax return? Here are a few questions to help you decide.

Do you:
1. Know your credit score?
2. Have a recent copy of your credit report?
3. Have a list of all credit card numbers, passwords, online IDs and accounts?
4. Pay bills late because you misplaced them?
5. Have a list of retirement accounts and life-insurance policies?
6. Have up-to-date wills, living wills and durable power of attorney documents?
7. Have a specific financial plan for reducing your debt?
8. Know how you're going to build your savings, with specific goals and dates?

If the answer is "No" or "I don't know" for most of these eight questions, then you could benefit from creating a plan to prioritize and organize your financial life. Here's a step-by-step guide.

1. Cut Paper Clutter
Does your kitchen counter look like a paper snowstorm? Are all the surfaces in your home covered with unopened mail? Is your inbox cluttered with finance-related emails? Then it's time to create a filing system organized by category and accounts. Your files should include folders for taxes, bank statements, bills, important papers and personal mail. Create the same folder system in your email account or print out important documents. The most important thing is to have a process that works for you.

2. File As You Go
Establish a policy of handling all paperwork a minimum number of times, preferably once. Begin by paying bills as soon as you receive them, whether via check or online, then file the papers.

3. Monitor Your Checking Account
Double check each month to make sure all checks, payments and deposits are recorded properly and no extra withdrawals have been made. You can do this each week or monthly -- online or via paper statements. You'll want to keep your paper statements as a reminder for the next year's income taxes. Make sure you file it with the income tax file for that year.

4. Keep All Important Documents Together
In a fireproof safe box, place all vital documents, including insurance policies, passports, birth and marriage certificates, divorce papers, will and trusts. Also file here a copy of all financial records stored on your computer. Buy a fireproof box online from merchants like Walmart, or Home Depot for about $35 to $150, depending on the size.

5. Open a Safe Deposit Box
A small safe deposit box is relatively expensive from your bank. Place in the box only valuable and irreplaceable documents and items. Some items shouldn't be stored here, however, particularly your will.

6. Make A Written Plan
Now that you've got your paperwork organized, it's time to establish goals. Keep them realistic and write them down or you're likely to blow your goals off. For each goal, you want to achieve, write down what you want to do, why you want to do it and how you'll get 'er done.

7. Decide How You'll Pay Off Debts
The key to paying off debts is to begin with the one that costs you the most. Make a list of all debts, rated from highest to lowest annual interest rates and begin paying off the debt with the highest interest rate. You'll want to include debts in your monthly budget. This is the one making the highest impact on your budget. It's typically best to use any savings you have to pay down this debt as your savings account usually is earning less interest than the interest charged by your creditor. Also, once you've paid down this debt, you can use the extra cash to build up your savings again.

8. Try Different Things
You'll want to create a plan that allows you to accomplish your goals in several different ways. The money to pay off a debt might come from adding to your income, selling some of your belongings, starting a second business, reducing expenses or a combination of all these things.

9. Move on To The Next Step
Typically, credit card debt will have the highest interest rate, so this is the one you'll start paying down first. Next, you'll want to pay off student loans, build up an emergency fund or save for such large expenditures as a house, car or baby.

10. Take Action
Create action steps for each goal, with each step being one that can be quickly accomplished. The idea is to take small, continuous steps towards your goals. Finally, seek professional help if you encounter problems.