Jean's Blog

Ask Jean Tuesday: Stop Piling, Start Filing

Posted by Jean

My wife and I have a disorganized stack of things that came in the mail — bills, receipts, bank statements, and others. I know we need to keep things organized, but I’m not sure what we should be keeping. Help! - Edward, Texas

You’re not alone — in fact, because so many people have a tough time keeping their finances organized, I recently launched a line of money organization products at Target (like the folders at left) — which I’m sending you a sample of in the mail! When it comes down to it, though, so much mail comes into the house every day – I understand your confusion on what is important, and what really isn’t. First, you need to invest in a filing cabinet or portable box (personally, I prefer using a portable box with hanging files – that way, I can pay my bills and file them away where I want and when I want). Get some hanging files and manila folders, and then break them down. The hanging files should cover general categories, like taxes, banking, credit cards, legal, and so on. Then within each hanging folder, be specific. For example, within “credit cards,” you should file by type and year (American Express 2010, Visa 2010). That way, when 2011 rolls around, you can archive those 2010 folders and start fresh in the new year.

Then, it’s time to tackle the task of going through that disorganized stack, and decide what to keep and what to toss.

When you bring in the mail each day, go right ahead and toss out the offers for credit cards (after shredding them, if you can). Some things that don’t come in the mail, like ATM receipts, information about prospective investments, and receipts for items you’re keeping, or don’t have a warranty on, should all be tossed after a month – or once you’ve compared them to a bill or bank statement.

Once a year has passed, taxes have been filed, and consolidated statements have come in, you can get rid of a bunch of papers (which, in the meantime, should be filed). Toss things like:

· Bank and brokerage statements

· Household bills (utilities, cell phones, cable, internet, etc.) – but keep them if you deduct them for office expenses.

· Credit card bills

· Pay stubs

· Social Security statements

I suggest keeping the following for seven years (or when you don’t need them anymore for taxes).

· Childcare records

· Flexible spending account documentation

· 401(k) and retirement plan annual statements

· IRA contribution records

· Investment purchase records

· Records of charitable donations

· Records on houses you’ve sold

· Tax returns and backup documents.

Papers regarding specific assets (homes, cars, etc.) should be filed away for as long as you have the asset. That includes everything from insurance policies to titles, receipts for home improvements, technologic devices, art, and jewelry, as well as warranties.

However, there are some papers that you should keep for a lifetime – with copies in a safe place (like a safe-deposit box) that’s not your home (in case of a fire or theft). These things include:

· Adoption papers

· Appraisals

· Birth Certificates

· Citizenship papers

· Custody agreements

· Deeds

· Divorce papers

· Financial aid documents

· A comprehensive list of credit card numbers, bank and brokerage statements, insurance papers, and contact numbers for all of the above.

· List of contacts like lawyers, doctors, accountants, and family members.

· Military records

· Powers of Attorney

· Wills and living wills

Is this list daunting? Yes, of course it is – even in this age of technology, there is a lot of paper to keep track of – and it can be hard to tell if it’s important or not, and where it should go if it is. Just take some time to go through it all and put it away, safely – trust me, you’ll enjoy the counter space.