If any of you are like me, paper is a little hard to tame if you don’t have a good system. There is nothing new under the sun. As such, I found the below advice from Mary Hunt’s Debt-Proof Living website. I trust that it will help you stay organized as you wade through financial waters.
If the paper monster has buried you under an avalanche of receipts, bank statements, ATM slips, investment records, paycheck stubs and bills, the good news is you can probably throw most of it away without worry. But before you fire up the shredder, you need to know what to toss and what to keep.
Step 1: Toss all you can.
Monthly. Once you have reconciled your bank and credit card statements, you can shred ATM receipts, bank deposit slips, credit card receipts and sales receipts at the end of each month. Keep receipts for purchases that may be tax deductible, those that involve warranties and any item that has a replacement cost that exceeds the deductible on your homeowners' or renters' insurance.
Yearly. Once you reconcile your W-2 against your paycheck stubs, you can toss those stubs for the year along with monthly credit-card and mortgage statements, phone and utility bills and quarterly and monthly investment reports. The same goes for other statements that detail the entire year's activity on a final end-of-the year statement.
Step 2: Keep what you must.
Three to seven years. Hang on to year-end statements for credit card accounts, mortgage statements, investments, W-2s and 1099s that recap the year's activities. Keep these for at least three years, along with canceled checks and receipts for deductible expenses, retirement account contributions, charitable donations, child-care bills, mortgage interest and all other items that support your income tax filings. The IRS has three years to examine your tax return for errors and up to six years if there's reason to suspect that you underreported your gross income by 25 percent or more. Until all possible audit windows close, you should retain all supporting documents.
Indefinitely. Keep tax returns for the long haul and receipts for major purchases and home improvements as long as you own them. In the event of an insurance claim, you may need to prove these purchases or your heirs will need to know how much you paid for them for tax purposes.
Step 3: Pick a spot.
If you don't have a designated place for paperwork, it's going to end up in piles all over the house. The secret for taming the paper monster is to designate one room, corner, drawer, cabinet or closet where you store all of your bills, current records and paperwork. You'll need a trash can, file folders and a container to hold them. Keep all of your important papers in this one place. For paperwork that you will keep longer than one month, create a file folder. One folder might be labeled "Tax Deductible," another "Insurance," and so on.
Step 4: Stick to it.
Get into a routine of tossing what you can and filing the rest. Keep your system simple and you'll stick with it.
You'll be amazed at the difference a little organization will make in your life. You'll be less likely to misplace bills, miss payment deadlines or forget to take valuable tax-deductions. The biggest payoff will be peace of mind.
Peace & Blessings
Sharon
I will have more for you on Monday, November 8th! Until then keep working your plan for financial peace and freedom.
Tuesday's Blog: Ponnie has a special blog for us
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