I've been witness to and helping a friend move recently. How do we all accumulate so much stuff? Anyway, putting everything into boxes, making choices about what to take, what to give away, and what to store. It's a demanding situation but also a great time to purge.

This time of year we're all buried in another area...paperwork. We're gathering our tax info and either using computer software or getting everything ready for our tax preparer.

Looking around, do you wonder what happened to our "paperless society?" I know I do. I have four file cabinets. One for active clients and business files, another for active personal files. They are in the house and close by. Then I have two file cabinets in the garage, for archived clients and business files and archived personal files. Phew. That's a ton of paper.

An organizer that my client was using told her that most people keep 80% more paperwork than they need to. I'm guilty of that, and I thought it would make a good topic for today's article.

If you're buried under an avalanche of paper, or just not sure what to purge, read on. I hope you'll be inspired to clean out and shred what you don't need. You'll probably still keep more than you need to (if you're anything like me...).

On another subject, I'm starting on that book about "What I Wish My Parents Had Taught Me About Money," so if you didn't send me your story about that, now's the time. It is very intriguing, touching and instructive to hear what people have said about this. I'll be using them as chapter heads and then the body of the book will be about suggestions for teaching your children about money. I'd love to hear from you.

If you're feeling particularly perky, I'd love you to 'like' my Brossmoney page on Facebook. I've got a goal of 100 likes (an arbitrary yet round number) and would appreciate your contribution. 

Until next time,

p.s. A special welcome to my new subscribers!  I sincerely hope you will appreciate my articles and insights!

sb  

Where does all this paper come from? Even if you get a lot of your bills and statements on line, you can feel overwhelmed by the retention of paperwork. How long do you keep things? How should you purge it? What do you need to keep?

I've read articles about this for years, and each article is slightly different. I use the gist of consensus within the various articles and then make my own decisions. Please don't see what's written here as your "truth" because your life may have particularities that require some paperwork to be kept longer, so checking with your accountant and attorney is always indicated.

Here are some of the suggestions that I've read:

"Permanent"

• Tax Returns: the documents themselves, with proof of payment if you owed taxes.
• IRS forms about non-deductible contributions to a traditional or Roth IRA.
• Legal Documents: divorce decrees, wills, trusts, powers or attorney, adoption or custody agreements, etc.
• Retirement, pension, and investment account annual summary statements.
• Receipts for capital home improvements until you sell the home, and then as tax return documentation (see below).
• Receipts for large purchases (for insurance purposes).
• Vital records (birth, death, marriage, adoption, etc.)
• Business records: (for the self-employed) annual financial statements, incorporation documents, stock records, licenses, patents, trademarks, etc.; fixed asset additions, purchase receipts
• Military records.
• Passport (until expired)
• Stock certificates
• Major debt repayment records (including loan/mortgage paperwork)
• In general, anything with an original signature or raised seal.

On-Line Storage

The papers that are listed above on the "permanent" list are not those that can be stored in the cloud or other locations, and then the original shredded. You might even want to keep the original in a safety deposit box, and only a copy at home (although your passport needs to be accessible potentially at short notice).

At Least 6 Years (some say 7)

• Tax Return Documentation: The IRS can go back 3 years to audit a tax return from the date a return is filed (although longer if fraud or under-reported income is suspected)
  • W2's, 1099's, proof of deductible expenses (charitable contributions, medical, deductible travel/entertainment, etc.)
  • Any documentation regarding your various deductions and claims
  • Settled accident claims
  • Mortgages, deeds, leases on sold property
  • Records on sold stocks and bonds

One to Three Years

I tend to keep bills one year but statements up to three (if not tax deductible), and then shred:

• Utility bills
• Credit card statements
• Bank statements
• Employment applications
• Medical bills (because of potential insurance disputes)
• Investment transactions/statements (until you get the annual summary)

Keep Until Sold, Reconciled, or Renewed:

• Car records
• Credit card receipts (until you get the statement or know you're not going to return it)
• ATM/deposit slips
• Insurance policies
• Paystubs (until you receive your W-2)
• Sales receipts (unless large purchase, life of warranty, or sold)
• Property records
• Warranties/Instructions (for life of product)

How to Organize

Keep this year's documents at hand, but older documents can be archived. You can store them by year in banker's boxes or a filing cabinet. If you put a note on them for the year that they can be shredded, it's easier to do your annual purge.

  When I was a child, my father who was an expert in organization told me that the key is: Touch a paper only once. What he meant was that if you put it down, you will eventually have to pick it up again, potentially losing or forgetting about it. When you receive it, transact what's required and file it. For instance, I pay my bills as they come in and then file the bill. Bulging in-boxes and piles of paper are daunting and sometimes paralyzing.

If you use an expanding file that has sides on it for your tax records, you can put deductible items in that file all year long, and just have to sort those papers at tax time. There are individual file folders which expand to 1-1/2" or 3-1/2" that have sides so your papers won't fall out when you pick the file up...perfect for your tax files.

How to Purge

I'm a believer in shredding. In my perfect world, every home would have a cross-cut confetti shredder and any paper worth keeping is worth shredding. Of particular importance are those papers with your social security number or financial account number, but I've heard of identity thieves starting with utility account numbers and getting additional information from the office.

If you have a massive number of documents, there are free community shred days as well as shredding services that for a very reasonable amount will shred whole boxes of paper.

Yes, we're still drowning in paper, but having a system in place for those papers and purging appropriately will help you stay clear of the avalanche.

Your stress-free financial life will be easier to maintain if you tame the paper dragon. Organizing the outside helps to organize our thoughts and actions.

If your financial life isn't as stress-free as you'd like, I'm the expert at de-stressing your money habits so that you can "purge" the old and embrace new easier ways. I'm only a call or email away, and have a compassionate ear for your current situation and the wherewithal to help you improve it.