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Save or Shred?

Save or shred? That's the eternal question after tax season is over (unless, of course, you filed for an extension). What should you do with all those post-tax paper piles?

You're not alone. A lot of people remain buried under grocery receipts, investment reports and old utility bills long after their taxes are filed. And they have no idea what to save or shred.

To dig out your home office or kitchen table, here's a guide to financial record-keeping. First, get several file folders and mark them by subject (Cars, Taxes, Retirement Account, etc.). Invest in a sturdy file cabinet; you'll be using it for many years to come.

Documents you need to keep permanently:

  • Birth, death, marriage and divorce certificates
  • Current passports
  • Home inventory (for insurance records)
  • Medical records/history of any major test/illness
  • “Pink slips” for vehicles
  • Social Security cards
  • Stock purchase agreements
  • Tax returns (but all the tax-related documents that go with it need to be kept for only 3-4 years; if you think you may have understated your income, keep documents up to 7 years)
  • Wills

Documents you need to keep as long as you own the item(s):

  • Automobile records (title, registration, repairs)
  • Insurance policies (disability, medical, life, personal property, umbrella)
  • Investments (purchase records)
  • Property bill or purchase
  • Receipts (appliances, art, antiques, collectibles, furniture, major purchases)
  • Vehicle maintenance records and paperwork related to your car, until it's sold. Then give the file to the new owner.

Documents you need to keep for 7 years:

  • Bank statements (if needed for tax purposes – and only keep canceled checks or duplicate/carbon copies of checks if that is your only record)
  • Credit card statements (if tax-related purchases on statements; otherwise, until annual interest statement is supplied by company)
  • Investments (sales records)
  • Mortgage or loan discharge (as long as you own, or 7 years after discharge)
  • Home improvements (as long as you own home, or 7 years after sale. They can be deducted against capital gains at tax time.)
  • Medical billings

Receipts and miscellaneous:

  • Clothing – for the length of the returns period, unless tracking household budget
  • Credit card statements – until statement comes and you can match purchases
  • Household repairs – for life of warranty, or longer to track reliability record of service people and their rates
  • Phone and utility bills – current bill and may keep one previous year to check billing pattern
  • Warranties and instructions – life of warranty or item. Stick label with warranty expiration date and service repair number on bottom of appliance. The receipt should be attached to the warranty or instructions.

Don't toss it: Shred it!

When in doubt, shred any paperwork that contains personal financial data, especially Social Security numbers, PIN numbers or passwords, bank documents, signed contracts or leases, even travel itineraries or used airline tickets. Better safe than sorry!

Now that you know what to save or shred,
need more help with paperwork?
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