Decluttering Your Financial Papers

The first step to decluttering is disposal.

How long should you keep papers?

Forever: Real estate documents. Auto repair documents. Nondeductible IRA contributions (laws may pass to allow deductions in the future). All the other things like wills, passports, birth certificates, etc. These are the non-expiring things.

Term – keep these as long as you have them: Insurance policies, accounts that you have, warranties.  You don’t need to keep all the statements or contracts, just the latest one.

7-Year Rule: taxes and all papers related to your taxes should be kept 7 years.  Pay stubs and any letters or notes, and any retirement plan information. 1099s. Any documents related to money you get for insurance claims.

Monthly Bills: you can toss after you have paid them, but keep the final statement that says you paid in full.  Go paperless.

Go Paperless: Bills, bank statements, credit card bills, rewards programs.

  1. Go through your files and get the “forever” documents into their own filing folders.
  2. Pull out all the stuff over 7 years old and toss it.
  3. If you have a filing system, then target folders to remove old documents.  If you don’t have a filing system, keep reading.

Backup!

You can save space by going paperless, and storing the data online. In some ways, it’s not as safe – you can be wiped out if a disk fails or the service closes – but it’s safer than having only paper records if your home burns  up or floods.

As you go paperless, learn how to download the important documents into a digital archive of statements.

You can photograph or scan your documents.

Save emails into folders, and then, every year or so, download them and delete, or save as PDF. Whatever works.

You can keep everything. Just keep it organized.

Filing

My paper filing system is simple:

  • One folder for every account: Union Bank, 21st Century Insurance, Geico, each credit card, each insurance, etc.
  • One folder for each asset: Car.  I don’t have a house.
  • One folder for every employer, and every client, and every business I hire.
  • One folder for each year of taxes.
  • One folder for each organization I’ve joined, or each volunteer project.
  • A shoebox for reciepts that I need for taxes.

It used to fit into a single file box, but it now takes up a two-drawer filing cabinet. Some of the folders are empty. It’s OK.

My digital archives on the computer use the same organization, more or less.

References

Daily Worth

Consumer Reports

Lifehacker

Free Ebook

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