Jul 162010

A reader recently requested that I explain how I set up my household file box, and which filing categories I use. A Facebook inquiry revealed that this is an area where many people struggle. I used to have a problem with this too, until I finally found a simple system that works for me.

My household filing system is a plastic, portable, hanging file box with a lid. I purchased it at Wal-Mart, but you can also find them at office supply stores, like Staples.

I use 3 different colors of hanging folders, because we used to own rental property, and are still receiving payments for a property sold on contract. We also operate a business out of our home. My files are sorted by color, and arranged alphabetically within each color.


These are my file categories (I won’t explain my rental or business categories, because these won’t be of interest to most readers). I use labeled manila folders to create subcategories within each general file category.

BANK – I use a subcategory folder for each account

BILLS – Within this hanging file, I have 4 manila folders, each labeled with one week of the month – 1st-7th, 8th-14th, etc. When I receive bills, I file them according to their due date.



DISCOVER CARD – I use a manila folder inside each credit card file, to hold receipts



KIDS (this is for bulky stuff that doesn’t fit in their HMG sections)


MEMBERSHIPS – This is for paperwork from organizations we belong to. Some examples are:

PROCEEDINGS (This is stuff I’m currently dealing with)




VEHICLES – I keep car maintenance and repair records here.


(NOTE: We keep bank and investment statements in 3-ring binders, organized by month. These were provided by our financial institutions).

This basic system works well for the handling of weekly household paperwork. We keep paperwork that is seldom needed or referred to in our long-term filing cabinet in the basement. We have the following files:

INVESTMENTS (we keep the annual reports and prospectuses here)
WILL (copy)

We keep abstracts, deeds, titles, birth/marriage certificates, paid promissory notes, savings bonds, etc. in our fireproof safe. We rarely need these documents, and we want to protect them from damage, because they’re difficult and expensive to replace.

At year-end, we put all of our paperwork in a banker’s box, label it, and put it in long-term storage in our back shed. We keep these boxes for seven years, which is the statute of limitations for IRS audit. After seven years, the contents get shredded and recycled.

Here are some tips for setting up an effective filing system:

1. Print the titles of your tabs and labels with large, bold letters. I like to use a labelmaker for this.

2. On subcategory file labels, indicate the hanging file titles in which they belong. Here’s an example:

File title: INSURANCE

Subcategory titles:


3. When choosing file titles, use the words you most commonly associate with the documents. For example, “DEED” instead of “WARRANTY DEED.” This will make it easier for you to find things.

4. If you find that your subcategory folders are making your hanging files too bulky, considering having more than one hanging file per category. For example:

UTILITIES (1 of 2)

UTILITIES (2 of 2)

5.  Arrange files alphabetically

6. Clip related papers together, to keep your files neat and orderly. I prefer binder clips for this, because paper clips slip off, and catch on other papers.

7. Don’t use general categories like MISCELLANEOUS or INFORMATION. All papers could potentially fit into these categories, and they’ll become catch-alls for stuff you don’t want to deal with. This won’t help you get and stay organized.

8. If you operate a home business, consider using different colored folders for your business files. Arrange your files so that the folders of each color are together and alphabetized. We have a home business and an installment sale contract, so I use three different colors.

9. Keep it simple. If you get too detailed and make gazillions of files, your system will become tedious and complicated, and you won’t enjoy using it!

Before you begin filing, I highly recommend that you read this article, “Your Important Papers: What to Keep and Where.” This is a very useful reference that I keep in my HMG and refer to often.

Now gather all of your papers. Go through the entire house and find every scrap. Start at the top of the pile, and handle each paper only once. Don’t set anything aside to deal with later, and use your recycling bin liberally! Remember that only 15% of filed paper is ever referred to again.

IMPORTANT! To prevent identity theft, make sure to shred any papers with personal information in a cross-cut shredder before you recycle them. This includes names, addresses, account numbers, social security numbers, and birth dates. Don’t take chances–90% of identity theft is caused by consumers being careless with their own information.

Good luck! I hope this article helps you tackle that paper pile, once and for all 🙂