Is your garage or home filing system overflowing with bank statements and paid bills from ten years ago?  Are you unsure about what documents need to be retained and what can be tossed? Speaking of tossing, what documents can be tossed in the trash, and which should be shredded?  Are you wanting to finally get control of your documents? If so, here are some suggestions for getting that paper under control today.

• Implement an electronic filing system, where you can easily store all vital documents without the need to hold on to them indefinitely. This can be done in several ways.
  • Create a virtual file cabinet with file folders right on your computer desktop. You may run into some issues both with storage space as well as recovering the documents if the computer crashes or it is lost or stolen.
  • Purchasing an external hard drive to back up your documents will give you more storage capability and could provide additional security by password protecting the additional device.
  • If you prefer to make things simple and have the ability to access your documents from any device, you can pay a monthly or annual subscription to a cloud base system (Dropbox, Google Drive, Microsoft OneDrive and Box). Depending on your storage and security needs, there are several different subscriptions plans you may choose from starting as low as $2 a month up to $20 a month.
• Sign up for e-bills and online/auto bill payments on any accounts that allow you, such as utilities, credit cards, auto/home loan. This could help eliminate the need to scan or shred documents. You’ll always have access to prior months documents and can download and save the current billing statement straight to your computer or cloud-based storage if desired. While many people are hesitant to pay their bills online, online security has increased tremendously in recent years. Not only does online bill payment eliminate the need to write a check and mail a payment, it again eliminates the need to store those statements for longer than need be.
• Sign up for electronic statements from your financial institutions. Today, banks keep at least 18 months of statements that can be easily accessed from your online banking account. Other investment institutions like TD Ameritrade will keep statements from the inception date of the account. If a statement or copy of a transaction or check is needed, just go online and download a PDF statement to print or save on your computer for future reference. 

Keep in mind that there are some original documents you will want to save. Documents you will use frequently throughout life, or where obtaining a replacement will cost a fee and take time to receive, such as birth certificates and academic transcripts, be sure to keep original documents secure and in a safe place.  Also make sure relatives know how to access these documents. You may even want to provide a copy to a trusted advisor, children, or other entities that may require originals in the future.

Here are some documents you’ll want to hold on to:

• All the main certificates (Birth, Marriage, Divorce, Death, Baptism)
• Professional or educational certificates/licenses
• Adoption records
• Military records and discharge papers
• Medical directives or records on specific condition that are frequently shared
• Passports
• Social Security cards
• Legal decrees
• Property deeds
• Life Insurance contracts
• Trust/Wills/Power of Attorney (should be shared with family or trusted advisor)

Here are some tips for hanging onto other financial documents:

• Bank statements. You may want to save bank statements for one year as it may help with sorting taxes, then shred. If you move to e-statements, you can eliminate this issue altogether.
• Tax returns and related documents should be saved for at least seven years, even though the IRS only has three years in which they can initiate an audit of past returns.  If audited they can go back additional years (usually not more than six years). Once past the seven years, be sure to shred any returns, correspondence, W-2s, 1099s, and other related documents.
• Credit card and utility statements do not need to be saved. Once the bill has been checked for accuracy and paid/posted, the statement may be safely shredded. Move to e-billing to eliminate the need to shred. Most credit card companies provide an annual summary at the end of the year for tax purposes.
• Pay stubs should be saved for the current year. Once the W-2 has been received, pay stubs should be shredded.  Many employers have moved to electronic access to W-2s and pay stubs, so you can access the information when needed, and you won’t have the chore of shredding.
• Sales receipts and warranties for high-dollar items could be saved until the warranty expires, then they can be tossed. If the receipt has any personal information on it, be sure to shred it. Many stores now can look up your receipt by using the credit card used for the purchase eliminating the need to hang onto everyday receipts.

By adopting some of these measures, you’ll have that pile of documents down to a manageable level in no time.