Jean's Blog

Ask Jean Thursday: What to Keep, What to Toss

Posted by Jean

Where may I find information about how long to keep financial and personal documents/records?

-Yolanda, Davie, Florida

Over the past few months we’ve received more than a few emails asking about what to keep and what to toss when it comes to financial documents. Luckily, I have a set of guidelines you can follow to avoid the piles of paper that seem to appear out of nowhere in even the most organized of homes:

Things you can get rid of right now:

• Credit card solicitations
• Marketing material that comes in your bank and credit card statement

Things you can get rid of in a month (or when you’ve reconciled your bill or bank statement):

• ATM receipts
• Other receipts (Hold on to the receipt if it’s a high-ticket item, such as an iPod, computer, television, etc. For other items, as long as you don’t have plans to return the item, or need the receipt for a rebate or warranty, go ahead and toss it.)
• Prospectuses and other information about investments you might be considering

Things to toss after one year (or when your end-of-year consolidated statements come in and your taxes have been filed):

• Bank statements
• 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

Things to toss after seven years (or when you know you won’t need them any longer 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

Things to 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

Things to keep forever (in a safe or safe-deposit box, with a second copy in another safe, off-location 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

I’m sure you have some questions. Are these things you’re tossing safe to go out with the trash? How do I organize the documents I’m saving?

When it comes to throwing out documents that might have your personal information on them, I recommend using a shredder. Crosscut shredders aren’t too expensive (about $100-$150) and will make it impossible for identity thieves to steal your information.

To keep organization simple, I use a system I call “Bills in a Box.” Essentially, “Bills in a Box” is a portable file folder box, filled with hanging file folders labeled with each of the following categories:

• Taxes
• Insurance
• Health Care
• Banking
• Retirement/Brokerage
• Credit Cards
• Home
• Auto
• Legal
• Estate
• To-Do
• To-Be-Paid

Within each hanging folder are manila folders for each subcategory. For example, in the “Auto” category, you might find separate folders for “Auto Insurance,” and “Lease Payments.” Once you’ve paid your taxes and taken care of all bills for the current year, simply put these files in storage and replace them for files for 2010.