Organizing Your Important Papers

But, you’re not entirely sure which items should go and which should stay—or exactly where and how long you should keep the ones that stay.

If you’re like many people, you have growing stacks of receipts and “important” papers somewhere in a box—or in a drawer—or in several drawers.

Before you’re eventually engulfed by those growing stacks, you need to weed them out. But, you’re not entirely sure which items should go and which should stay—or exactly where and how long you should keep the ones that stay.

You can resolve this ongoing dilemma for good by setting up a simple system for organizing your papers. That may not sound very fun or exciting, but it doesn’t have to be difficult—and it can help you avoid long hours of anxious rummaging without ever finding the record you desperately need.

The key word for making your organizational system work is “simple.” A “simple-as-possible” system is easier to set up—and easier to deal with on an ongoing basis.

1. What do I keep?

The rule of thumb is to keep records for as long as they may be needed, to document everything from your birth date to your tax deductions to your status on paying off a loan or mortgage.

Generally, you should keep:

• All income tax records—forms, receipts for deductible items, paycheck stubs, cancelled checks, etc—for at least three years. (The IRS has that long to challenge ordinary returns—and even longer to challenge returns that seriously understate income or that may be fraudulent.)

• Home and property tax records for as long as you own the property, plus three additional years after you last filed a tax return on the property.

• Records related to major purchases (cars, appliances, furniture, etc.) for as long as you own the items.

• Insurance records for as long as the policies remain in force.

• Medical payments records for at least one year and medical insurance claim records until the claim is paid.

• Sales slips, paid bills, and cancelled checks for small payments for a year, in case any dispute should arise.

• Credit-card receipts for very large purchases semi-permanently, but for small purchases only until you verify the charge on your card statement.

• Health and personal and family records (birth and death certificates, wills, marriage licenses, etc.) permanently.

2. Where should I keep important papers?

Once you have picked out which papers to keep, you then have to decide where to keep them. Again, there are some general guidelines that will help you weigh the decision between easy access and long-term safety.

Use a home file to store papers that you often need to see. These could include banking and credit records, consumer purchase records, investment and financial records, personal and employment records, and housing records.

Use a fireproof container in your home to store difficult-to-replace papers that you only occasionally need to see. These could include tax records; health, medical and insurance records; records of bank and credit card account numbers; and estate planning and retirement records.

Use a safe-deposit box away from your home to store difficult-to-replace papers that you need to keep indefinitely but seldom need to see. These could include personal legal records, property records, copies of life insurance policies, and information related to major investments.

3. What if I can’t organize my way out of a paper bag?

Don’t worry if you’re the person who knows they need to get organized by don’t have that gene in you. There are a few ways to tackle it. You probably have a family member or friend who is an organization king/queen – perhaps for the price of a home cooked meal, they would help you get started. Or, you might just head to the office supply store and with or without a guided tour, browse the storage aisles for the amazing array of simple to complex boxes, notebooks, files and labels that might inspire a solution to your needs. Or, if you’re one who prefers to bring in the experts, there are people who offer accounting and home organizing services families; check your community newsletter, town paper or the yellow pages for such advertisements.

Whether you are a fastidious organizer, a free-spirit or someone in between, you need to protect yourself, your family and your future by organizing your important personal information.

Elizabeth Coit is executive director of Networks Financial Institute at Indiana State University. Networks Financial Institute considers financial literacy to be a lifelong learning endeavor, and its financial literacy programming, under the banner of “Cash Counts,” has been created utilizing standards based, stakeholder driven approaches. For more information, visit www.networksfinancialinstitute.org. Or contact Elizabeth at elizabeth.coit@isunetworks.org.