When I'm cleaning out my closet, I get rid of anything I haven't worn in the last two years. With paperwork, the rules vary. Here's a cheat sheet:
- Toss immediately: Credit card solicitations; marketing material included in bank and credit card statements.
- Throw out after one month: ATM receipts; prospectuses and other information about investments you're considering; receipts for purchases, assuming you're keeping them or there's no warranty.
- Throw out after one year: Bank statements; brokerage statements; cell phone, cable, telephone and Internet statements (except when deducting for work-related expenses); credit card bills; pay stubs; social security statements; utility bills.
- Throw out after seven years: Childcare records; flexible spending account documentation; 401(k) and other retirement plan year-end statements; IRA contributions; purchase records for investments; records of charitable donations; records on houses you've sold; tax returns and backup documentation.
- Keep as long as you have the underlying asset: Insurance policies; receipts for important purchases; receipts for renovations or other investments made in your property; titles; warranty papers.
- Keep forever: Adoption papers; appraisals; birth certificates; citizenship papers; custody agreements; deeds; divorce papers; financial aid documents; military records; powers of attorney (medical and financial); stock certificates; wills/living wills.
Now that you have a system, you have to maintain it. Every day, when the mail comes in, get your file box and open up the bills one by one. Write checks, deduct the amounts from your check register and put them directly in the mailbox. Do not procrastinate.
What else can you do quickly, cheaply and easily?
Next: "I don't have time to deal with my money."
- Pay your bills online. It saves you time, money and clutter. You can schedule certain repetitive bills to be paid every month and easy enter variable bills as they come.
- Remove yourself from the junk mail lists. Send a letter or postcard with your name, home address and signature to:
Mail Preference Service
Direct Marketing Association
P.O. Box 643
Carmel, NY 10512
- Create a place for receipts. Make a compartment in your wallet into the holding pen for receipts you need for expense records or tax purposes.