Wednesday, July 27, 2016

How To Go Paperless

Back in 2010, I decided to go paperless in as many areas of my life as possible. At the time, I was investing in real estate and buying and selling properties generates a huge amount of paperwork. Even excluding those documents, the amount of paperwork in my life was astounding. I had a 4 drawer filing cabinet in my office closet that was full of receipts, utility bills, cancelled checks, and who knows what else. I also had another two drawer filing cabinet in the office itself that was about half full and getting fuller. If I needed to find something, I had to dig out the relevant folder and, page by page, go through all the documents looking for the particular one I needed. It was time consuming.

Keep Or Shred?

I already owned a combination printer / scanner, so I made a decision to scan all my documents and shred the originals. The project took weeks. In the process, I found a bunch of stuff I knew I didn’t need to keep – things like 3 year old phone bills and 5 year old cancelled checks. But there were also things I felt I should keep – old tax returns, for one. As I plowed through my filing cabinets, I had to make a decision for each document – keep or shred?

How Do I Organize All This Stuff?

Once I had that decision made, I had another dilemma: how should I organize all these documents on my computer? After much thinking, I decided to break down my digital archives into two main categories: documents to keep forever and documents to keep for a year (a rolling 12 month window). Things like brokerage and 401(k) statements I would keep forever. (I have been involved in some class action lawsuits regarding stock purchases made years ago, so I felt I should keep all my old brokerage statements.) Things like utility bills, bank statements, and credit card statements, I would keep only the previous 12 months’ worth. That led me to come up with the below directory structure:

A file naming convention was the next logical step to make. How could I name things that made it easy to determine what the document was and when it was from? I settled on naming documents with the following format: Source-N-Description-YYYYMMDD. Source would be the name of the company the document was from. N would be a character indicating who the document applied to. I use "S" for myself, "M" for my wife, "H" for my daughter. For items that apply to both my wife and myself, such as joint accounts, I use "J," for Joint. Description is a short description detailing the document, such as "Statement" or "Invoice." Finally, YYYYMMDD would indicate the document date. (This date format allows items to be in chronological order when the files are sorted by name.) For monthly items, I omit the DD portion.

For example, my April joint checking account statement would be named BofA-J-Checking Statement-201604.PDF. An explanation of benefits statement from my insurance company for a doctor’s visit would be named Cigna-S-Smith-20160512.PDF. From the name, I can tell the document is from my insurance company and is regarding a visit I made to Dr. Smith on May 12, 2016.

I’ve been using this method for 6 years so far and it’s worked out incredibly well.

Searching Woes

Of course, one of the big benefits to having your documents in electronic form is the ability to search them with your computer.  Looking for all brokerage statements that show you owned Cisco stock? Just open up Windows Explorer and type CSCO in the search box. Theoretically.

There are two issues here. First, most of the documents you get when you sign up for paperless billing with be .PDF files. Windows may not be able to index these files natively. You need to install a search filter so Windows can read the PDF files and index the content. A great guide on how to do this can be found here.

But another issue looms. When you scan documents yourself, what you are actually doing is taking a photograph of your document. Even if you save it to a PDF file, it’s still basically a photo wrapped in a PDF box. There is no text for Windows to index, which means you cannot search it. If you get a PDF file from a company via their paperless billing option, this will not be the case because the document is generated from the source directly into a PDF file, retaining all the text as text within the file. Remember that pile of old documents you have to scan? Not searchable. (It is possible to use optical character recognition (OCR) software to translate the images into text, but I’ve found those programs to have a poor success rate.) So what can you do?

A Helpful Tip

Rather than just start scanning everything you’ve got, first log on to a company’s website and see if they have any of your documents archived in electronic form. Even though you may not have signed up for paperless billing until recently, they still might have older documents available electronically. For instance, when I checked my Schwab account, they had electronic copies of my documents going back at least 5 years, even though I had not gone paperless until 1 or 2 months prior. Download as many as you can. This will save you hours of time scanning old documents and will also allow those documents to be searchable within Windows.

The Tools I Use

I’ve had great success with a shareware program called ScanToPDF. I use the basic version, which costs $25. The Standard Edition costs $49 and says it features an OCR component so your PDF files will be searchable. (I’ve never tried it, so I can’t comment on how accurate it is.)

And finally, once you have all these documents in electronic form, you’re probably going to want to make sure they are backed up somewhere. You can make backups to an external drive but if your house burns down, that backup drive is probably going to be gone along with your computer. For that reason, I use Carbonite for secure, offsite backups.

Putting The Post Office Out Of Business

So there you go. That’s how I went paperless. I spent days shredding all my old documents – my shredder overheated several times during this process.  I was able to empty out my 4 drawer filing cabinet, sell it, and reclaim a ton of closet space. It was a long process, but now that it’s done, I can process new statements or invoices in less than 1 minute, the day they arrive. I can search for just about anything almost instantly, going back years. And because I pay bills electronically through my bank, I don’t need to write checks and mail payments either. My snail mail volume has been cut by over half. Fewer checks and statements going through the mail means fewer chances for identity theft.

But Wait! That's Not All!

I’ve also extended this concept to product manuals for any items I may purchase. If I get a new television or kitchen appliance, it usually comes with a book-sized manual. No need to keep those! I have a folder in my directory structure called Manuals and in that, subfolders for each appliance. I scan the purchase receipt for the item (if it’s not already in electronic form) and put it in the folder. Then I use Google to find an electronic copy of the product manual and download that to my folder as well. I'm just saving trees left and right!


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