We all know how quickly bills, receipts, documents and more can grow. Before you know it, you’ve got a mountain of paperwork you don’t know what to do with.
It’s normal when the paperwork has piled up for one to ask, “What is necessary to keep? What would I be able to get rid of? If I keep it, how long must I hang to it? Also, where do I put it?”
When you don’t know what to keep, you may find sorting through the documents and receipts frustrating and give up by stuffing it all into a large envelope to be managed “at some point” later. To avoid this, we’d like to give you some advice that will make this a simple process:
What’s important enough to keep in a protected, file organizer or safe-store box?
Good question. This relates to all data, both money related and individual, that ought to be kept for all time such as marriage and birth certificates, citizenship and death certificates, degrees and transcripts. Also include any veteran’s papers and medical records (vaccinations and surgeries) as well as Social Security cards and passports.
Plan to keep any and all estate-planning documents and legal contracts filed so you have quick access to them when needed. Your lawyer might possibly keep the originals of your estate plan and contracts, while you will hang on to the certified copies. Consider scanning them to your computer to back up the hard copy with a digital copy.
What to keep online?
Online capacity bodes well for data you have to hold for a time frame. Once you have invested in a scanner and a back up drive, you have a good way to store all the information the Internal Revenue Service could request for at least seven years after you’ve filed which includes final returns, supporting documents and records of real-estate purchases and home improvements.
However, some documents might need to stick around the past seven-year mark. For example, if you include the sale of an asset on a return that was purchased many years prior, you’ll need the purchase documentation. A solid rule of thumb would be to keep all documents on asset purchases for at least seven years after reporting the sale to the IRS. Other items to keep online may include:
- All documents relating to your mortgage or student loans
- Any photos of your personal property for potential insurance claims in case of loss or damage
- Electronic banking, credit, and investment account statements
- All year-end composite statements can replace the prior 12 months’ worth of reports
Be sure keep up with regular back ups as it can be catastrophic to lose a hard drive. Backups can be done digitally and stored in the “cloud” or placed on external drive.
What to store in expandable file folders?
Any items with term dates or are regularly replaced need to stay in a place easily accessible. In your folder keep all insurance policy benefits statements (auto, property, health, disability, long-term care), along with warranties and your annual Social Security benefits statement.
What to delete or get rid of?
With today’s technology, it is easy to get access to past bills, statements and plan descriptions. If the information is retrievable from the credit institution or utility at no or little cost, consider shredding once the statement has been reviewed and paid. Because of the Internet, this type of data is retrievable online on the company’s website by entering your user name and password.
If you have questions about how to organize or what documents are important to keep, call a Box Financial Advisor today.