If you're a regular reader of this blog, you may have gotten the impression that I prefer the 10,000 foot view of my finances:
- I'm a strong Myers-Briggs P type (the J types tend to be more organized)
- A big tax refund is a cushion for me
- Sometimes I forget to follow through on rebates
- I even use The Force when I budget!
This 10,000-foot view is more an offshoot of disorganization on my part than any other reason. This also reflects a deficit of attention to details. A high-up view is a good thing once in a while, and it's better than having my head in the clouds or having my head in the sand or looking in the wrong place.
Getting an organized handle on my finances — and on a lot of other things in my life — is one of the most important things I can work on now, because the broad strokes that paint the picture I have now can't capture the little things that add up to a lot of lost money:
- Missed payments. Most of our payments are taken out automatically, but a few aren't, like our water bill, and the bill can get lost in the shuffle. Late payments cost extra money. Too many late payments result in a dinged credit rating.
- Missed rebates. Rebate deals can be really good. But if you forget to turn the stupid thing in, it's a really bad deal.
- Missed opportunities. Some folks make money hand over fist with 0% balance transfer offers. I usually don't even try these because I'm worried I'll screw them up. Or coupons expire. Or a big refund from Uncle Sam shows up.
- Emergency purchases. You were sure you had another box of diapers and it's 2 AM and your two-year-old is really, uh, aromatic? The convenience store is a few miles away and the diapers there are two dollars — each!
- Throwing money out the window. That store credit you received when you returned that unwanted gift? The one that was on the slip of paper that was the only record of the credit? The one that the cashier said not to lose because it's like losing cash?
- Overdraft protection fees. By this I mean the transfer from your savings account to your checking account that happens when you overdraw the checking account but have the savings to cover it. Five bucks a check for a week — when you get the notice in the mail for the first one! — adds up in a hurry.
- Buying things you already have. The one you have is still good, but it's either buried under something and you can't find it, or you don't remember that you have it.
- Extra trips to the store. Another few gallons of gas burned up to take back the item that was the wrong size or to buy something you forgot you needed.
- Dining out a lot. Because you ran out of time in the morning and didn't pack a lunch.
- Out of control spending. Some people can get away with not tracking their spending — I could for a while — but small leaks in your wallet can grow if left unchecked.
- Stuff breaking before its time. Forgetting to change the air filter in your central air system or forgetting to drain the hose in winter time will cause expensive surprises.
- Spoiled food. Related to the last one.
- Missed tax deductions. Mileage as a business expense? Items donated to the Salvation Army? These can be tax-deductible under some circumstances, but only if you have adequate proof. No proof, no deduction. Or if you take the deduction,
- Overdue charges. Library books, movies, etc.
- Susceptibility to sales pitches. A basic radon test was perfectly sufficient when we had our house inspected prior to purchasing it, but I didn't know that and paid $100 for a deluxe one that I didn't really need.
- Huge amounts of lost productivity. I've probably spent several months of my life looking for something that I've misplaced. Or I've been working at 25% capacity because all of the visual and mental noise of disorganization just wears me down; I don't know what to do or even where to start on a project sometimes.
Organization can pay off large dividends; I'm hoping it does for me. That's why I've added an Organization category.
What other ways can disorganization be costly?
Great post! I'm the organizer in the family and we're still miles away from true organization. Thanks for this list — it reminds me why I should try even harder.
Hello John, This a great place for the people who want to know how to save money and organize their finance.
The things, which you have mentioned above, happen in our busy life without our notice. And you have nicely put those things "Extra trips to the store" "Out of control spending" which makes everyone think.
Angering your wife with clutter then buying her flowers to get out of the doghouse!
I've lost warranty paperwork/receipt for something broken when I knew it was within the warranty period. And there are always those receipts I lose which then fail to make it onto my expense reports….
Just started reading, looks good so far! A book that I've found to be immensely useful in the organization of my life: Getting Things Done, by David Allen. The best thing about it, which sets it apart from all the other organization books, is that he gives you a basic idea to work with, which you can adjust to work best for you, rather than a strict system that you must follow. It's easy to fall off his wagon, but it's just as easy to get back on. All hope is not lost if you slip for a few weeks. There's a big online community for this book; one of the best is 43folders.com. Hope this helps!
I will be adding these notes to the long list I generated after reading "The Money Tree" by Martin Bamford. Although most of all the combined tips are common sense its amazing that you don't give them any though until they're there in black & white. There is a TV show in the UK based on being thifty and not wasteful and they prove that you can pay off your mortgage in a year by following simple rules.
What a great list of tips! It's going straight on my wall!! I also subscribe to http://www.flylady.net and she has excellent tips on how to get organised in the first place, like a 27-fling boogie.
Along the same line as missed opportunities; not taking the time to register for a credit card that gives you five percent back on gas and groceries.
This was such a timely article! I recently wrote a post about Clutter referencing this article. (the comment above is supposed to take you there; something happened with the trackback evidently.) The URL for the article is http://wisdomwalking.net/2007/01/19/cluttered-des…
KWiz
One other way that I hope nobody ever becomes familiar with, is it can negatively impact a fast evacuation. If you're organized and know what (and where it is) you'd need to grab you'll be much better off than if you're faced with an emergency evacuation (due to fire, flood, hurricane, etc) and everything is all over the place.
The epitome of organization is to have a "ready-to-grab" box and even a backpack with emergency supplies in an easy-to-reach spot, just in case. (NO, I'm not there yet.) It could make the difference between getting out with needed paperwork and losing it all.
Just as an example, a cousin who lives on the Mississippi Gulf Coast had his house collapse during Hurrican Katrina. They got out of the house just hours before, but he didn't grab anything. All his insurance and mortgage paperwork for this house and his damaged investment properties was trapped under water-logged debris. He's still dealing with the aftermath of not having that paperwork.
DB
I am hyper-organized but of course still screw up occasionally. When that happens, I often wind up paying for overnight shipping, express, or whatever because the cost of NOT getting the papers or whatever they are to their destination in time is even greater. I hate shelling out the extra freight! But sometimes peace of mind is worth it. At the moment people are missing overseas trips because they didn't allow enough time for their passports, and even paying for expediting is not sufficient. (Fortunately I started that process early.) No advantage in cutting it close on a passport.
i just read a similar article on yahoo about this and it's true. it pays to have things in order and to know when stuff is due.
this is very true. Even in the area I live in (we don't get a lot of emergencies) my friend's house burnt down and they lost everything. They didn't even have any paperwork to prove their identity.
Great Post! I can relate to almost all of these. We forgot to turn in a rebate for some cell phones and it cost us! It does pay to be organized!