organizing finances

As you go through the process of getting organized, I think it’s really important to eliminate clutter.  The problem with financial clutter, though, is that you have to hang on to much of that paperwork for years.  But some things can and should be tossed after a month or two, so I’ve created a handy guide that can help you tame the paper tiger:

Toss immediately:

  • Credit card solicitations (shred them, preferably – more on this in a bit)
  • Marketing material included in bank and credit card statements

Toss after a month, or when you reconcile with a bill or bank statement:

  • ATM receipts
  • Prospectuses and other information about investments you’re considering
  • Other receipts, assuming you’re not planning to return the item and you don’t need it for a warranty or rebate

Toss after one year, or when end-of-year consolidated statements come in and you’ve filed taxes:

  • Brokerage statements
  • Cell phone, cable, telephone, and Internet statements (unless you’re deducting them for work or home office-related expenses)
  • Credit card bills
  • Pay stubs
  • Social Security statements
  • Utility bills

Toss after seven years, or when no longer needed for taxes:

  • Child-care records
  • Flexible-spending account documentation
  • 401(k) and retirement plan year-end statements
  • IRA contributions
  • Purchase records for investments
  • Records of charitable donations
  • Records on houses you’ve sold
  • Tax returns with back up documentation

Keep as long as you own the asset:

  • Insurance policies
  • Receipts for important purchases (technology, art, antiques, jewelry)
  • Receipts for renovations or investments made on your home or property
  • Titles
  • Warranties

Keep forever, in a safe or safe-deposit box (with a second copy in a safe location off-premises):

  • Adoption papers
  • Appraisals
  • Birth certificates
  • Citizenship papers
  • Custody agreements
  • Deeds
  • Divorce papers
  • Financial aid documents
  • List of credit card numbers, bank and brokerage statements, insurance policies and toll-free contact information
  • List of important contacts, like your lawyer, accountant, doctor, and relatives
  • Military records
  • Powers of attorney
  • Stock certificates
  • Wills and living wills

Finally, I want to urge you to spend the money on a shredder.  Not only will you save space in your trashcan, but you’ll protect yourself against identity theft, because a cross-cut shredder makes it virtually impossible for someone to piece your personal information back together. You can pick one up at an office supply store (and many big-box discount stores, too) for under $100.

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