2. Learn What to Keep
Here’s what you need to hang onto and for how long:
|Items to Keep
When to Toss
|Once the claim has been paid, you don’t need these any longer, unless you’re deducting the medical expense on your annual tax return. Then follow IRS guidelines for keeping these documents.
|Typically, you could dispose of these after your bill has been paid. If you anticipate selling your home, hang onto the last year’s worth to help potential home owners.
|Documentation of major loans and insurance policies
|Keep these along with all of your important identification papers (birth certificates, marriage license, Social Security cards, passports, etc.) in a secure spot, such as a safe deposit box at your local bank or a firebox at home. Keep payoff statements forever.
|Annual tax returns and supporting documents
|Keep the most recent three years. You can be audited for up to seven by the IRS (see irs.gov for additional information).
|Keep these until you’ve received your annual W-2 form
|Property records that show improvements to your home
|These can be used when selling a home to offset capital gains when the property is eventually sold. Keep until the house is put up for sale.
|Keep these for one year
|Keep all capital gains tax reports for three years
3. Make a Shredder Your Best Friend
Invest in a quality paper shredder or get the okay to use one at the office. Shredding is key when getting rid of old documents. If it’s going away, it needs to be shredded to prevent anyone from acquiring any personal information about you. Recycle what’s left.
For the important stuff that remains, develop an easy to follow filing system that you’ll actually use. Invest in colored folders with tabs and a label maker if you don’t already own them. Categorize, label, and keep them in a drawer or filing cabinet.
4. Switch to Digital
Going digital with your statements and paychecks can help solve a lot of problems. Almost every bank, credit card company, investment company, and employer now offers a paper-free option. Take them up on this and switch to paperless delivery.
Although opting in to e-delivery helps prevent additional physical clutter, you may still have a big mess on your hands in time. This one will just be on your computer. So, make sure you employ the same thinking there as with your desk. Keep it clean and organized. Regularly go through your emails and purge the ones that are no longer relevant.
5. Get Started Now
Make upkeep a normal routine. Play some music to get in the mindset for firing up that shredder. The longer you wait to tackle that mess, the bigger that mountain of paper will grow.
Having your own organizing consultant can help in the undertaking. Luckily, you have one already. Talk with your financial professional about other methods of dealing with your financial clutter. Together, you can develop a strategy of what you should hang on to and what you can find joy in parting with forever.