Friday, June 15, 2007

Paper Piles Be Gone: Part 3

What Financial Papers to Save and For How Long:

General Rule # 1: Get rid of what you can. Most paper falls into the categories of save for one year or less, save for 7 years (tax related), or save indefinitely.

General Rule #2: Invest in a confetti shredder to guard against identity theft. They cost about $40 which is a minimal price to pay for safe-guarding your financial future.

Toss Monthly:
ATM & deposit slips - after you've checked them against your statement, credit card receipts** - same as above applies, receipts for minor purchases**

**I'm breaking my cardinal rule here because you don't need to keep receipts once you reconcile them to your statements, however for ease, I just toss them into an envelope labeled with the month that I keep in my monthly folder and then clean them out every year when I clean the folder. This has come in handy a couple times when I've wanted to return something. See Paper Piles Be Gone: Part Two.

Toss After One Year:
Monthly bank and credit card statements, monthly or quarterly brokerage and mutual fund statements, phone and other utility bills, paycheck stubs - once you've reconciled to W-2 statement

* The exception to the guidelines above is keep it if it supports for your tax return, especially any deductions you take.

Keep for Seven Years:
W-2 and 1099 forms, cancelled checks and receipts/ statements that support your tax returns, pretty much anything tax related

Keep Forever:
Tax returns (you can ditch the support documentation after 7 years if you are an honest taxpayer, unless shredding it helps you case!), year end summaries from financial service companies, confirmation slips with purchase price of any investment you own, home improvement records, major purchase receipts - anything that you would claim on your homeowners or renters insurance

You can view Paper Piles Be Gone: Part One and Part Two here and here for more ideas about how to set up a short-term filing system for projects and outstanding items like bills and long-term files.

Next for Paper Piles Be Gone - how to get off the junk mail circuit, especially the multiple daily credit cards offers that put you at risk for identity theft and pile up until you find the time to shred them.

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