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You've heard it before. "You always have to pay your bills on time or it will hurt your credit rating." The fact is that not paying your bills on time can also cost you a bunch of money.

The last time I checked, being late on a credit card payment can cost you as much as $29 each time. In some cases this is more than the payment.

Most banks and loan companies also charge some sort of late fee. Even my electric company tacks on 10% if you don't pay on time.

The bad part of this is that most of the time making, late payments can be avoided. That's because they are simply a result of a lack of organization. If your bills and receipts aren't kept organized, there is a good chance you will eventually be late on a payment.

There is nothing more frustrating than receiving a bill for something you know you've already paid and not being able to find the receipt or cancelled check. In this case, if you can't prove you already paid it, then you still owe it.

You have to have an organized filing system that you keep up with faithfully. At Budget Stretcher, I have a system so that you can have your budget, bill paying and filing system all in one convenient three-ring binder.

To use this system, you will need to setup a budget using The Complete Budget and Bill Organizer. This organizer is available free at HomeMoneyHelp.com. I would suggest visiting this page to setup your budget before you try to set up your organizer.

Whether you decide to use my Bill Organizer system or another system, you need to have one. I am going to go through my system step by step.

Keeping track of your bills each month can be a headache. How to organize your bill paying and keep track of those receipts, canceled checks, loan papers and other important paperwork can be made easy.

Below is a list of supplies you will need. These are available at all department and office supply stores.

SETUP

Step One: Open your three-ring binder. Insert your pocket tab dividers. In front of the pocket dividers, place the Write on Tab Divider. The Write on Tab Divider is designed to provide support while you are writing on the Monthly Bill Summary.

Step Two: After you complete your Budget as outlined in the The Complete Budget and Bill Organizer (HomeMoneyHelp.com), label the dividers. Start by labeling the first divider, Bills to be Paid. Then label the rest of the dividers with the names of your bills. See the below sample:

Divider Tab's Labels: Bills To Be Paid, House Payment, Car Payments, Utilities, Telephone, etc.

Continue this until you have a divider for each bill. If you don't have enough dividers, I suggest that you combine similar bills. This could be all car payments, utilities or credit cards.

Step Three: Place your Budget Form, Monthly Bill Summary, and Page 2 of the Monthly Bill Summary in the document protectors. Then place them in the three-ring binder in this order: Monthly Bill Summary (this will be the first form you see when you open your binder), Budget Form, Monthly Bill Summary Page 2

USING YOUR BILL ORGANIZER

Step One: Gather all of your bill statements and payment books and place them in the pocket divider labeled Bills to be Paid. This is where all the bills are to be placed when you receive them.

Step Two: On payday, look at section 2 of the Monthly Bill Summary to determine which bills need to be paid that payday. Write out your checks for these bills and get them ready to mail. On the statement for each bill or in your payment book, write the check number and date paid.

Step Three: File all statements in the pocket divider corresponding to that bill. When you receive your bank statement and after you reconcile it, also put the canceled checks in the pocket divider corresponding to that bill. File any correspondence in these pocket dividers.

One of the biggest problems people have with organizing their bills and receipts is not knowing what to keep and what to throw away.

First, there are really four types of files. Personal (bill receipts, etc), tax files (any paperwork that is required for taxes), long term files (mortgages, car contracts, or any other contract) and important papers (will, birth certificates, etc.)

Personal files are the files mentioned in the Bill Organizer. At the end of the year, if the files aren't too thick, you can consolidate them into one folder labeled with the year. Examples of things in this category are: monthly insurance statements, credit card statements, mortgage receipts, and any other monthly statement. KEEP THESE RECORDS FOR TWO YEARS.

Tax files can be filed in a folder or accordion folder. These items include: W2 forms, 1099 forms, all tax forms with attachments and any other form that you receive that must be reported on your taxes. KEEP THESE RECORDS FOR THREE YEARS. It is best to keep your previous years tax forms plus the three years before that. The IRS only audits back three years. You can destroy older files.

Long Term files include your mortgage or lease agreements, notes on car purchases or any contract that is still in effect. Keep these files in a safe place. KEEP THESE FILES AT LEAST UNTIL THE AGREEMENT HAS ENDED. MY SUGGESTION IS TO KEEP THEM FOR FIVE YEARS AFTER THE AGREEMENT HAS ENDED.

Important papers should be kept together where you can lay your hands on them quickly. You might want to use a safety deposit box or at least a locked drawer. These items include: wills, deeds, trusts, stock certificates, birth and death certificates and any other extremely important documents. KEEP THESE FILES INDEFINITELY.

As you can see, this organizer will help you keep everything in order. However, no organizer will be any good if you don't keep up with it.

One tip that will help you keep this organizer neat is to eliminate any paper that doesn't need to be there. Many people keep the envelope that the bill is received in. You will find that this will clutter your organizer faster than anything else.

It is also not a good idea to fold your receipts or copies of your statements unless you absolutely must to make them fit.

Having a system to file your bills and receipts will make it much easier to know what bills are due and when they are due. Once you know this, paying your bills on time is much easier.

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