Get Organized: Tricks for keeping track of your household expenses

Getty ImagesGetty ImagesI've always thought I was pretty organized when it came to my finances, but I've recently realized that I'm not. Sure, I've got a couple of metal file cabinets in which I store all of my paperwork -- when I take the time to actually sort and file everything. But as bills get paid they usually get dumped in one of two places: in a pile on my desk or in folder in my work bag. When I have too many pieces of finance-related paper in one place, I transfer the pile to another location. It all gets filed away eventually, but sometimes "eventually" can be a long way away.

Getting organized means more than just paying your bills on time and balancing your checkbook. It's a way of life and a way of thinking that can lead to a better way of managing your money.

Regina Leeds, the New York Times best-selling author of "One Year to an Organized Life" recently teamed up with NAPFA-certified financial advisor Russell Wild to write "One Year to an Organized Financial Life," and she tackles money matters with the same step-by-step, week-by-week methods she uses for kicking clutter to the curb permanently.

In her book, she divides the task of complete financial organization into a 12-month plan that makes organization much less overwhelming. (She's known as "The Zen Organizer" for a reason!) She suggests that you start by decluttering and organizing your workspace, touches on everything from taxes to managing credit to retirement planning to holiday expenses, and ends with ways to keep monitoring your financial goals and moving forward.

It's impossible to keep track of your household expenses without knowing exactly what those expenses are. Leeds suggests taking a look at your bank statement as well as your credit card statements and bills in order to find recurring expenses. Then, separate the nondiscretionary, fixed items -- the ones that absolutely have to be paid each month -- from the discretionary, variable costs. Need examples? Your rent or mortgage, utility bills, health insurance, taxes, loans, and child care expenses are nondiscretionary. Magazines, movies, lattes, and the latest lipstick? Discretionary. Some things -- groceries and gas, for instance -- are fixed items with wiggle room; you can't do without them, but maybe you can whittle those bills down a bit.

It can be hard to get a handle on your discretionary spending. One way to do it is to keep track of every penny for a week or more (tip: save your receipts). "Most people are unconsciously bleeding money from relatively small purchases," Leeds points out. Think of it this way: A latte costs about $5. A latte on the way to work every day, five days a week, will run you about $1,250 a year. That's a lot of caffeine -- and cash.

Once you know how much money is already going out, figure out exactly how much is coming in regularly, and create your budget, keeping in mind that it doesn't have to be set in stone. If you're financial situation is such that you can't pay your bills each month, Leeds offers some advice on how to prioritize your payments:

1. Pay Uncle Sam first. "The IRS can make your life miserable like few other creditors can," she writes.
2. Pay the people who can repossess your stuff next. "Your mortgage company and the auto dealer come next in order of importance," Leeds says. "You obviously don't want to come home to find your furniture on the street or your vehicle towed."
3. Seek the lowest cost. Pay down the credit card with the highest interest rate first, while making at least the minimum payment on any others.
4. Consider the little guy. If you have to choose between paying a big box store or a mom-and-pop shop, consider that the smaller creditor may need your money in order to pay his own bills.

What's your system for keeping track of household expenses?