Maeda’s second law of simplicity is “Organize.” In this law, he maintains that through organization, you can achieve the semblance of reduction. He goes on to describe a system that he calls “SLIP: Sort, Label, Integrate, Prioritize.” Through this system, you can organize just about anything, without resorting to short term solutions such as a bigger home, storage facility or elaborate closet organizers, which all serve to either change the stuff to space ratio or simply structure the chaos.

The concept of SLIP is to organize based on “What goes with what.” Think of this similar to folding and putting away your laundry. You probably put all your underwear and socks in one drawer, all your shirts in another, ultimately with all your foldable clothes in a dresser, all your hanging clothes in the closet and all your linens on a shelf in some other closet, all of which are grouped by type. With SLIP, you take this concept and apply it systematically to EVERYTHING.

SLIP: Sort

The process of sorting can be done with just pencil and paper. You start by writing everything that needs sorting down on separate pieces of paper, such as post-its. Once everything is on paper, you start moving the papers around on a flat surface and create rough groupings. Once these groupings are complete, you move on to Label.

SLIP: Label

This step is both the simplest and most complex task in the whole process. Once you’ve sorted, you need to decide on a relevant name or, if you can’t come up with a name, an arbitrary code for each group. As you proceed with the next step, some of these labels may disappear or change, so don’t put too much effort into this.

SLIP: Integrate

In this step, you take significantly similar groups and integrate them, sometimes breaking apart some groups in order to better integrate their components with other groups. The overall result should be a reduction of groups to as few logical groups as possible.

SLIP: Prioritize

Once you’ve sorted, labeled and integrated, it is time to prioritize items. In order to do this, Maeda suggests you use “The Pareto Principle as a rule of thumb.” This principle generalizes the concept that approximately 80% of anything can be controlled by approximately 20% of something else. For example, approximately 80% of your to-do items can be accomplished with approximately 20% of your time. Thus when prioritizing, you put the “vital few” items as your initial focus.

So now we know all about “SLIP” and organization, how do we apply it to personal finances? One way is setting up our first budget. We go through our various statements and find all our monetary flows, such as:

• Paycheck 1
• Paycheck 2
• Credit Card 1
• Credit Card 2
• Credit Card 3
• Auto Loan
• Mortgage
• Grocery Store
• Clothing Store (unneeded clothes)
• Movie Theater
• Auto Shop
• Gas Station
• Home Improvement Store
• Vacation 1
• Vacation 2

If one were to go into detail on the transactions, these could be the first set of labels, but for simplicity, let’s assume that these ARE the transactions. Once we’ve identified these transactions, we group them together like so:

• Income
  • Paycheck 1
  • Paycheck 2
• Credit Card Payments
  • Credit Card 1
  • Credit Card 2
  • Credit Card 3
• Auto Expenses
  • Auto Loan
  • Auto Shop
  • Gas Station
• House
  • Mortgage
  • Home Improvement Store
• Fun
  • Movie Theater
  • Vacation 1
  • Vacation 2
  • Clothing Store (because the clothes weren’t needed)
• O1 (Random label)
  • Grocery Store

At this point, we’ve sorted and labeled, now we need to integrate, perhaps like this:

• Income
  • Paycheck 1
  • Paycheck 2
• Debt
  • Credit Card 1
  • Credit Card 2
  • Credit Card 3
  • Auto Loan
  • Mortgage
• Upkeep
  • Home Improvement Store
  • Auto Shop
  • Gas Station
  • Grocery Store
• Fun
  • Movie Theater
  • Vacation 1
  • Vacation 2
  • Clothing Store

Now that we’ve integrated, we move on to the final step of prioritizing. For this example, we will have three categories: Income, Required Expenses and Splurging (aka Discretionary Expenses). Ultimately, we organize our transactions like this:

1. Income
   • Paycheck 1
   • Paycheck 2
2. Required Expenses
   • Credit Card 1
   • Credit Card 2
   • Credit Card 3
   • Auto Loan
   • Mortgage
   • Auto Shop
   • Gas Station
   • Home Improvement Store
3. Splurge
   • Movie Theater
   • Vacation 1
   • Vacation 2
   • Clothing Store

From this prioritization, it is relatively easy to go on and create a budget. This example is just the tip of the iceberg. For every person and situation, there are an infinite number of ways that they can SLIP into a budget.