File or Toss? A Handy Guide for Assessing Your Paperwork

Community Manager — Thu, 27 Jan 2011 16:38:00 GMT

Forget spring cleaning. January's clean slate mojo often provides a wonderful impetus for closet cleaning and re-organizing. Hoping to purge unnecessary paperwork and fine-tune your home office files for 2011? While it's not always easy to tell if your documents have reached the end of their useful life, most documents, just like milk, eventually expire.

Consult our handy list, assembled courtesy of ConsumerReports.org, for advice on what to save for now, what to keep forever and what can (happily) be tossed.

Short timers: Keep for a year or less

Bank records: Keep deposit and ATM receipts until you reconcile them with your monthly statements. File statements until tax time, keep any you need to prove deductions; shred the rest.
Credit-card bills: Check them, pay them and shred them unless you need to support a tax deduction. Also keep statements for purchases of items under warranty, shred when warranty expires.
Current-year tax records: Keep for the year.
Insurance policies: Keep policies that you renew each year and shred the old one's after renewing.
Investment statements: Shred monthly statements after the new one arrives. Keep annual statements until you sell the investments.
Pay stubs: Keep the calendar year's records until you reconcile them with your annual W-2 form, and then shred them.
Household furnishings paperwork: Keep receipts, warranties, and instruction booklets for appliances and electronics. Toss when the warranty expires or you no longer own the item.

Depends on You: Time frame varies

Investment purchase confirmations: Keep to establish your cost basis and holding period when you sell the investments; if this information appears on your annual statements, keep those instead. Once you sell the investment, shred the old statements and move the sales paperwork into this year's tax file.
Loan documents: Keep closing documents for mortgage, vehicle, student, and other loans in a safe-deposit box until loan is paid off. Then shred.
Savings bonds: Keep in a secure place until you cash them in. Or you can convert them to electronic form using the Treasury's SmartExchange program, at www. Treasureydirect.gov. http://bit.ly/dr88tL
Vehicle records: Keep purchase receipts, titles, and registration information in a safe-deposit box as long as you own the car, boat, truck, or other vehicle. Store the maintenance and repair records. Toss when you no longer own.

Seven Years: The magic number for tax documents

Federal and state tax returns and their supporting records.
Receipts, bank statements, investment statements and all paperwork with tax-related information.

The Long Haul: Essential records to be kept permanently

Birth and death certificates
Marriage licenses
Divorce decrees
Social Security cards
Military discharge papers
Defined-benefit plan documents: pension-plan documents from your current and former employers.
Estate-planning documents such as wills, powers of attorney, health care proxy.
Life-insurance policies
Safe-deposit box inventory: Note the location of the box and your keys, and keep a list of what you have in it.

Keep in mind that if you've gone paperless, storing photos, bank statements and even scanned copies of vital records on your computer, your challenge lies not in purging physical clutter but in ensuring that your files are adequately backed up.

How do you back up important digital records? What type of fling system do you use to keep vital records at your fingertips? Share your thoughts here by posting a comment.

by Bradley Eggers

Beyond Folders : record retention

File or Toss? A Handy Guide for Assessing Your Paperwork