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DROWNING IN PAPER? What to Keep, What to Toss, What to Digitize

Paper is the bane of my existence — and probably yours, too.

In preparing for tax season, I recently digitized a box of old receipts but also ended up clearing out a filing cabinet full of statements, warranties, and other papers that have sat forgotten for years, but looked like they could be important.

When it comes to paper clutter, what should you keep and what's safe to toss?

Important Documents to Keep:

In general, you want to keep physical copies of records pertaining to state or federal matters. These documents usually require a visit to a government agency (or a tedious process by phone or mail) to replace, so it's always a good idea to have easy access should you need them right away. These records include:

  • Birth and death certificates

  • Social security cards

  • Marriage and divorce certificates

  • Adoption and immigration papers

  • Last wills, living wills, living trusts, and powers of attorney

  • Pension plan documents

You should also keep physical copies of documents related to your personal assets, including:

  • Vehicle titles and loan documents

  • House deeds and mortgage documents

  • Home, auto, and life insurance policies (while not strictly necessary, having physical and digital copies of these documents will facilitate claims if, say, a natural disaster happens).

The next set of crucial documents should be digitized, or their electronic versions stored:

  • Tax returns and supporting documents (keep for at least three years, but ideally up to seven)

  • Pay stubs (keep for at least six months, but ideally up to one year)

  • Social security statements (keep current copies)

  • Year-end retirement fund statements (keep current copies)Year-end investment statements (keep for at least three years after you sell the investments)Annual insurance policy statements (keep current copies)

  • Receipts for valuable items, such as jewelry, electronics, and art (unless originals are required by your insurance carrier)Home improvement records (keep for at least three years after you sell your house)

  • Vehicle repair and maintenance records (keep until you no longer own the vehicle)Warranties and related receipts (keep until they expire or you no longer own the items)

  • Medical bills (keep for one year after they've been paid)

  • Medical records and current prescriptions

Documents to Shred or Toss:

Monthly statements that you receive from banks and credit cards, including other financial papers such as ATM receipts, bank deposit and withdrawal slips, and canceled checks, can be shredded as soon as you reconcile them (or digitize them for tax purposes). You can also shred utility bills and personal bills (cell phone, etc.) as soon as they're paid. Shred any remaining paperwork that has your social security number, bank account numbers, or other personally identifying information in them.Documents that can go directly in the trash include product manuals (almost every manual from a major manufacturer can be found online), UPC codes (normally required to cash in rebates or register new warranties, but no longer needed after that), miscellaneous receipts that have no tax purposes, and personal notes that should (finally!) be digitized.

Quick Tips for Deciding When to Keep or Toss:

Think about how difficult or time-consuming it would be to obtain or replace the document. If the process takes substantial time or effort, then hanging on to that document is a wiser choice.

Many statements these days can be retrieved online for at least several months back, so you don't need to keep things like utility bills (to prove residency, for instance) if it's easier to download them when you need them.

If you're not signed up for electronic statements from all of your creditors and vendors, do so now to simplify your record-keeping.I also keep digital copies of almost every document that I have a physical copy of (such as my passport and insurance policies), in case I ever need to access them when I'm far from home.

Digital copies should be backed up to a secure cloud service, while physical copies should be stored in a fireproof safe or a secure offsite location.

Above as appeared in Apartment Therapy newsletter, March 2014

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