What Financial Paperwork Can You Safely Toss?

Do you have a mountain of more than a year’s worth of credit-card bills, ATM receipts, and pay stubs? Hanging on to every scrap of paper is not just a fire hazard. It could take you days instead of minutes to get the information you need for a tax preparer, a financial planner, or an attorney. If you’re the victim of a fire, flood, or theft, locating the data you need to file a claim will just add to your stress. And if something happens to you, loved ones will have a hard time finding your medical power of attorney, insurance papers, and accounts.

Good record-keeping makes it easier to find receipts and pay bills on time. “It’s amazing how much money disorganized people waste on late fees and interest charges,” says Stephanie Denton, author of “The Organized Life: Secrets of an Expert Organizer” (North Light Books, 2006). “That really adds up over time.”

keephome
Chances are you’re storing lots more paper than you need to. The table below will let you know how long you need to keep your most important financial papers and where to store them. You can reduce your paper load by switching to electronic statements and records whenever possible. And make a list of your important documents and their locations so that you or the person you’ve designated to carry on your affairs can consult it for quick access. Include details about how to find your safe-deposit-box inventory and key, insurance policies, and computer log-ons and passwords. Give the list to loved ones and be vigilant about updating it.

keepdepositTo help avoid identity theft, shred anything you throw away that contains personal information. Use a crosscut shredder rather than a strip one, which leaves long paper bands that could be reassembled.

Additional safe-deposit-box tips
Store personal and family records such as birth and death certificates, marriage licenses, divorce decrees, Social Security cards, and military discharge papers in the box; those documents should never be discarded. Keep a complete list of what’s in your box, and note the location of the box and keys. Update the list once a year or as you add or remove documents. You should also keep copies at home of all the documents that are stored in the box in case you need to refer to them.

What to save, where to store it, and when to toss it [Consumer Reports]

Comments

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  1. dangerp says:

    “The table below will let you know how long you need to keep your most important financial papers and where to store them.”

    Can we get the table please? I would really like to see it, and it seems like it’s really the point of the whole article.

  2. c!tizen says:

    If you’re a bank you can add a few things to the list:

    -mortgage modification paperwork
    -mortgage ownership/transfer documents
    -foreclosure procedures
    -anything related to financial law or ethics

  3. Macgyver says:

    It seem like a lot of information is missing from this post.

  4. Pam in Oregon says:

    Clicked through to see the table… not here huh?

  5. dangerp says:

    Here’s a tip for those of you who are timid about throwing away old paperwork or statements, or aren’t good at cleaning out your files regularly:

    Create 12 files – January through December. Place them in your filing cabinet in order, with the current month in the front (for example, October is in front, with November behind etc). As you receive monthly or quarterly correspondence (such as bills and statements), toss it in the monthly file after you have taken any necessary action on it.

    Once you’ve done this for a year, you will reach a folder that has items in it from last year. Take -everything- out of this folder, examine each piece, and decide if you have needed access to this document for the last year, and if you will really need it after a year of sitting in the cabinet. If you don’t need it anymore, shred it. If you realize that over the course of a year (or more), you’ve never needed to take a second glance at this particular type of correspondence, you might feel free to shred them as soon as they come in going forward. If you have discovered you have a need for the paperwork, then file it as normal, knowing that you’ve done your due diligence.

    We err on the side of keeping things in the monthly file rather than shredding, since it only takes a 2 second glance for each piece of paper in there. The nice thing is that after a year, those files never grow larger, they just maintain their size, and the system is perpetually self cleaning.

  6. aloria says:

    I actually just burnt out a shredder destroying all old documents. The only thing I kept were tax-related things like W-2s, returns, and receipts for charitable donations/ Credit card and bank statements are all paperless now, anyway, so I didn’t see the need to hold onto a bank statement from 2006 for an account I don’t even have anymore.

    • The_IT_Crone says:

      Bank accounts are paperless… and I just found out the hard way that they only keep about the last 2 years on file. You should at least download and save those statements to your computer.

  7. Stella says:

    My “filing system” isn’t all that organized, but I was still able to find both the invoice and credit card statement that proved I had paid an almost three year old medical bill after the laboratory mistakenly sent it to collections. Thank goodness for storing more paperwork than necessary.

    • bwcbwc says:

      True that. I don’t see how you can just throw out bank and CC statements after a year if the statute of limitations on debt collection is on the order of 5 years.

  8. dreamfish says:

    I keep all important documents in a fire safe (a small one) and everything else is scanned and then the paper version archived for a couple of years before being destroyed.

    I have over 5000 scanned document images and the whole lot comes to only about 500k. Very easy to keep two or three backup copies elsewhere too.

  9. jebarringer says:

    I’d recommend keeping at least a year and a quarter’s worth of pay stubs. When I (unfortunately) had to file for unemployment last January, they looked at my income from the year prior to the previous quarter (so, from fourth quarter 2008 to third quarter 2009) to determine my weekly benefits. They ended up making a mistake in their determination (somehow missed my income from the third quarter of 2009). To rectify the error, I had to physically bring pay stubs from that quarter into the local employment commission office, in order to prove that I had indeed worked and received income during that time.

  10. Mcshonky says:

    for the modern family
    scan it all
    for your parents above a certain age
    scan it for them

  11. Mcshonky says:

    If you have a parent or grandparent who refuses to throw away anything but won’t scan it
    buy them a multi pack of brightly colored 8.5×14 envelopes and a big marker.
    mark off each category on an envelope and at least have them sort it into the envelopes for easier searching when they pass on.

  12. jimstoic says:

    I recently discovered a discrepency in a credit card balance. I signed up for online statements and made my payments online. The credit card was sold by Citibank to Associated, with the latter taking over in March 2010. Records from before that time are now unavailable to me. It turns out that the mistake that created the discrepancy was mine, but I’ve learned that I need to keep copies of electronic statements on my hard drive (and backup) rather than trusting that I can always access them from the bank’s Web site.

  13. sonneillon says:

    I’m lazy about record keeping. Generally if it isn’t active or worth money I get rid of it after a year.

  14. gman863 says:

    Before I replaced my broken shredder, I tore up stuff like preapproved credit card junk mail, put it in the broken shredder basket and added the contents to the cats’ litter box just before emptying it.

    BTW – if you are keeping scanned copies or downloads of your credit card statements, tax returns, etc, remember to use an electronic file shredding program on them before you get rid of an old PC (freeware programs are available at sites such as http://www.majorgeeks.com).

    “Deleting” files or doing a quick disk reformat is not a secure method; the confidential data can reasily be retrieved using other freeware programs.

    • mac-phisto says:

      good advice. i recommend dbaning any PC you’re looking to get rid of. bear in mind that will erase the OS & manufacturer-specific drivers, but let the new owner worry about that.

      http://www.dban.org/

      but ALSO, when storing all that sensitive information on your HDD, you should protect it. you can do a basic encryption w/ windows thru the EFS, but bear in mind that if an ID theft is accessing your computer while a user is logged on, they’ll be able to access this data -> http://www.microsoft.com/windowsxp/using/security/learnmore/encryptdata.mspx

      a more robust (yet still free) alternative is truecrypt. this creates a virtual drive that you can mount with a password separate from your windows login. it’s a little more difficult to use, but definitely more secure. http://www.truecrypt.org/

  15. Ragman says:

    I’ve got everything I can on paperless billing, and those who don’t give me a pdf, I have CutePDF installed as a printer driver. Not much left that I have to scan each month.

    I also went through my product manuals and got pdfs off the internet. I only kept manuals that had diagrams that I may need in hand for repairs and tossed the rest. That opened up over a foot of file cabinet space. Then I went through all the folders for the monthly statements, scanned everything that was just there for information, got rid of folders that weren’t needed due to paperless statements, and shredded a couple reams worth of paper. Cut my file folder space usage in half, easily.

    With softcopies, it’s easier to just keep everything. I’ve had a couple of class action lawsuits that wanted 5-10 year old information if I was going to get in on the settlement. Glad I’m a pack rat who still had it.

  16. lordargent says:

    I don’t shred anything until my filing cabinet starts to get full (hasn’t happened yet).

    /my 6 year old cable install bill came in handy when the cable company ‘forgot’ that I had bought my cable modem from them vs renting it month to month.

  17. MDinCT says:

    I hang onto things for a really long time.
    It has come in very handy. I’ve had to go back over ten years to calculate the cost basis for mutual funds that I have dividend re-investment set up for. The funds management has changed hands and the new management companies don’t always keep the records for dividends for the entire life of the fund.
    I recommend saving the paper work relating assets (including monthly/quarterly statements) for as long as you own them plus the 7 years after you have sold them and paid the taxes. This has saved me thousands in capital gains taxes.

  18. coffee412 says:

    Evidently you can throw out your mortgage anytime.