From the Contacts Homescreen:


1. Click on the button, looks like a funnel, to the left of the Columns tab (top right of Contacts screen) See:  
https://madshot.net/032661ed8edd.png

2. Choose 'Create Custom Filter'

3. Top line for 'Choose Option' is the field that you want to create a filter on.  (Color Tag, State etc.)   See: https://madshot.net/a14af041dc2a.png

4. Middle line for 'Choose Option' will be the filter 'rule' you choose from the dropdown options. Eg:  Is, Is Not, Contains, Does Not Contain etc. (Options will vary depending upon the field type.)
    See: https://madshot.net/4ecd5db9edcd.png

5. If you're creating a filter for a custom field with text, type in the exact word of what you want filtered. 
  a.  You can add multiple options.  Eg: To filter a state you can have it set to look for the abbreviation and full word.  See: 
https://madshot.net/c556a0dc8f24.png
  

6. Save As: will be the title of your Filter. See:  https://madshot.net/d196050000ce.png


7. Created filters will only be visible tot he User who created it.  If you want available to all Users, check the box requesting this.  See: https://madshot.net/c280b52ee239.png
     (only the creator of the Custom Filter will have the option to edit or delete it) 

8. Click 'Create Filter' to finalize and Save.   Once created; custom filters appear in a dropdown format to the right of your existing built-in filters.  See:  https://madshot.net/93a22a303256.png