How to get financially organised - A practical way for today's lifestyle

I saw this article on Rediff about getting your records in shape and how you can manage your life better --- [Via rediff: Getahead Money]


Honestly, this article is a bit of a disappointment. The ideas present here is obviously important ie. the very act of keeping records and managing them better but hey cant we actually think a little better and manage our information clutter better if we apply technology to it better (don't tell me you hate technology - what are you doing reading blogs on the internet anyway :-) ?)


So what is really a more improved way of managing better - well let us start with some of the key needs and find a solution that fits the model.


I am a guy who is on the road all the time - I travel both nationally and internationally all the time and just like the average Joe (or Rama/krishna - take your pick), I get my regular set of bank statements, taxes and all the wonderful things that this article talks about.


So how do you figure out what is your advance tax payment on the Sept 15th (you knew that was the due date right?) if you are sitting in a hotel room in wisconsin? All those statements are safely filed away in your home in India while you are on a critical 2 week business trip that falls on the advance tax date!


Also we do keep getting wonderful notices about providing PAN details since we spent over 1 lakh in a year on credit card statements from the tax departments. If you have to pay for hotel rooms in Bangalore with your credit card as frequently as I do, guess what - 1 lakh per annum is not a big number that you think it is. The only good part is that my employer picks up the bill eventually but the credit card is in my name! So we are off scrambling to track down all those old credit card statements by asking our spouses on the phone to dig up from all those files around the house! Where did we file them anyway - or did we?


So here is the bunch of tricks that I have adopted that serves me well.


Step 1 : Get a tax accountant who can actually communicate via email : Yes this is important folks - they know their Form 2Ds but when it comes to email, there is a real challenge for you. Talk to them, test them out with a few emails and make sure they do check on a regular basis and respond back to you. If you cross that first hurdle, you have got a great start.



Step 2 : Get a good image scanner or a digital camera : When I am vaulting around the world, nothing beats the advantage of my wife sending me an e-mail with a couple of JPEG attachments saying - "hey I got these in the mail today from the dept. of tax - they look important - what do you want me to do ?" instead of "I received some letter from the tax department about your credit card. I just put it in your file! You can look at it when you get back". If you combine the Step 1 with this, I just forward the scanned attachment to my tax consultant with a note asking him deal with it while I am stuck wherever I am!


Step 3 : Tell all the banks to send you monthly electronic statements. Download them into a directory and let the Google desktop loose on them. When the tax department asks you about that Rs. 113485.33 transaction that you did, Google desktop will find it for you in milliseconds!


Step 4 : Get truecrypt Its a wonderful piece of encryption software that I have trusted my financial life to! No.. I am not associated with it in any way (I am just jealous that I didn't invent it ..) its open source, very stable , haven't lost data on me so far. Read the documentation carefully, set it up and keep all your statements inside it. You would be dumb to keep it on your harddisk without protection. So you have been warned

Step 5 : Digitize all your key documents - PAN cards, tax filing from last year etc.. etc., - You know what is important to you and even if you don't think it is not so important, go ahead and do it anyway, harddisk is cheap and Google desktop can do magic on large data sets! Also now if you ever need that "Xerox copy" the nearest printer is your best friend!


Step 6 : Prepare a good spreadsheet on key large transactions (when did you do it, which account, which cheque number, why did you do it etc.,) and keep it in the truecrypt volume. Or better yet, download your electornic bank statement and load it into an Excel spreadsheet. write a detailed comment against some of the large transactions (> 50K is a good metric) and save it away. Next index by Google will catch it.


step 7 : Keep another spreadsheet on the stock transactions that you did - helps to deal with those pesky tax returns quickly! Send it to your accountant by email and tell him to figure out the taxes!


step 8 : Backup the truecrypt volume REGULARLY in multiple locations - Home PC, your pen drive, your spouse's pen drive and a monthly backup CD burned and placed in a safety locker - trust me hard disks crash ALL THE TIME.

Thats all folks - you are ready and better organized than most financial institutions!

If you really look what I have preached here, the trick of the trade is to go electronic and combine it with a good search and you can get answers faster than tax man comes asking you questions! Not that you should not keep the hard copies but just don't depend on being able to quickly find out the details!

Good luck and get organized!