Inside: Do you feel buried in papers at home? Find out what documents are okay to get rid of and what paperwork you should keep.
It seems insurmountable. The amount of paperwork we have stacked in the office is…a lot. There are two filing cabinets, stacks of files, and boxes of more stuff.
How did it get this bad?
Some of the stacks were papers we hadn’t gotten into the filing cabinets yet. The boxes are genealogy paperwork that has been ignored. The rest has been sitting around as I’ve tried to convince someone in the family that no, we really don’t need our phone bills from 20 years ago or warranty info on items we no longer own.
I mean, I get it that you want to be prepared in case a bill collector comes after you so you can whip out a statement and go “Ha! This is proof I’ve paid!”
So what is a reasonable amount of time to hang on to paperwork before it is safe to get rid of it?
After some digging, this is what I’ve found.
Note: some time periods may vary from what I’ve given if the paperwork is needed for business, tax documentation, warranties, or insurance purposes.
Paperwork to keep forever
There is some paperwork you need to keep. Maybe not forever, but until you aren’t around any longer. So, forever for you.
- Birth certificates
- Marriage licenses
- Divorce decrees
- Adoption papers
- Citizenship and naturalization papers
- Mortgage payoff statement
- Social security cards
- Tax returns
- Annual investment or retirement plan statements
- Military discharge papers
- Estate planning documents (like your will)
- Insurance policies
- Define benefit plan documents (pension)
- Vehicle titles
- House deed
- Loan documents and final payoff statements
Now, wait, you say. Tax returns?
I know, conventional wisdom and even the IRS says seven years worth of tax returns is enough. However, there are enough stories out there of people needing to go back and prove items on much older returns, or showing they worked long enough to be eligible for Social Security, and more. Because of all that, I am now a convert to keeping returns forever.
If you haven’t been doing it, just start doing it going forward.
Paperwork to keep for an extended period
The next question is: What paperwork should I keep for a while?
- Last pay stub of the year – This can be tossed when your W-2 arrives and you confirm the information matches.
- Credit card statements – you can get rid of these after a year, or once statements reconcile if you don’t carry a balance. If you do carry a balance, save your statements until the balance is paid off plus one year.
- Monthly or quarterly investment statements – Wait until your annual statement arrives to ensure it lists all purchases and sales for capital gains information, then you can shred the non-annual statements.
- Bank statements – Keep statements for the calendar year, or up to 3 years. Yeah, the experts disagree on this one. Do whichever you are most comfortable with.
- Medically related papers – Medical billing is a large and hairy beast. It would be wise to keep copies of bills, receipts and insurance paperwork for upwards of 3 years.
- Mortgage payment statements – Keep until the mortgage is paid off.
- Loan payment statements – Keep until the loan is paid off
- Home improvement records – Save until 7 years after you sell your home. These records can be used to lower any capital gains tax you may incur on the sale of your house.
- Receipts and warranty information – Save these for items as long as the warranty lasts, especially for more expensive items.
- Owners manuals – Keep for the duration of ownership. It makes most sense for appliances.
This group seems to be the paperwork that takes up the most space. Setting up separate, labelled file folders for these helps.
What if your mortgage changes hands a few times? Keep all the paperwork for all of them. And especially watch statements when the servicer changes or you refinance and errors have been known to happen.
I will admit, owners manuals are bulky. For many things, you really don’t need to save them. For others, like your washer, mixer, and lawnmower you will want the manual. However, if you are able to find a free copy of the manual online, you can save that and then get rid of the paper version. Unless the manual is for something like a backup power generator because in that case, having a hard copy makes sense.
Paperwork you can eliminate as new comes in
What paperwork can you throw away on a regular basis? This includes
- Credit card receipts, ATM, and bank slips – Save these until you’ve reconciled with your monthly statement unless they are needed for warranties or taxes.
- Recently paid bills – You can eliminate old bills once you have something stating the bill has been paid.
- Old utility bills – If you’ve recently moved, keep the last bill from the old address. Otherwise, recurring utility bills will usually indicate when the previous bill was paid and your current account status so it makes sense to eliminate the older bills.
- Old insurance policies – You can shred the old policy information once you have a new one in hand.
- Old social security statements – Old statements may be shredded once you see the newest has retained previous information.
If you choose to eliminate this paperwork as it comes in, it really does help control the clutter and help keep your paperwork organized.
Getting it done
Does this seem overwhelming? It needn’t.
If you can’t be bothered to get rid of paperwork monthly, then annually at tax time makes perfect sense. At that time, you are already mucking about your records so why not make a shred pile at the same time? Just don’t mix the tax stuff in with the to-shred pile.
Another thing that helps? Going paperless, which is what we are doing more of.
Most bills, investment statements, credit card statements, and more are offered in PDF format from the provider. Create a digital filing system with a backup and your paper worries for all those statements disappears.
Tax season is almost done and it is the perfect time to clear your paperwork clutter. Are you with me?