Documents Need Spring Cleaning Too!
One of the services offered by BRPS is organizing your important documents and ensuring that your trusted individual knows exactly where all those documents are (Click Here for Access to a Tool for Organizing). What I have not addressed is how long you should hold on to documents and where the best place to store them is. Spring cleaning includes your filing cabinet, your safety deposit box/strongbox, or wherever else you keep your important documents, so let’s explore what to do with your important documents.
Forever and in a Fireproof Location.
This can be a safety deposit box in a financial institution or a locked fireproof safe, or a strongbox in your home. Ensure your trusted individual knows where these documents are located:
- Birth, marriage, and death certificates
- Adoption papers, either yours or your children’s
- Social Security card (although a lot of people ask to see this, you do not need to show it – keep it in a safe location)
- Divorce/separation agreements, even if your spouse has passed these documents are sometimes necessary to prove a name or title to an asset, i.e., VA benefits, getting an enhanced license, etc.
- Proof of citizenship
- Military service papers
Finite Timing
Finite timing means holding onto the documents until such time as the document is no longer valid. For instance, you should hold onto your refrigerator receipt until the warranty runs out. You should hold on to your insurance policy until a new one is valid, etc.
Keep in a Fireproof Location
- Real property deeds and all receipts that support home improvements. The home improvement receipts help establish your basis in the property when you sell it, which determines the capital gain or loss on the sale. If your capital gain is more than the allowed tax deduction, you will pay capital gains tax on the sale. Home improvements increase your basis, therefore lowering your capital gain.
- Mortgage paperwork also supports your basis and should include the lien release for fully paid mortgages.
- Vehicle titles and lien releases. This includes cars, trucks, campers, snowmobiles, 4-wheelers, jet skis, boats, tractors, etc.
- Insurance policies (Life, Long-Term Care, and Disability)
- Financial institution (banks, investment accounts, 529 plans, IRAs, etc.) originating paperwork. I do currently have this information in my fireproof location. Recently, I have been wondering why. I have online access to my accounts, and I have never referred to these documents. The terms have probably changed thirty times, for which I received an electronic notification. Therefore, I am not even sure these original documents are valid. I think in the future this recommendation may change, as I am certain my twenty-something child did not save his originating bank information when he opened his account.
Keep in a Filing Cabinet
- Repair receipts for your car. We have a folder for each vehicle that includes all purchase paperwork and repair receipts. The title and lien releases are in the fireproof location. When we go to get the car repaired, we know which services have been completed on the car. This has saved us quite a bit of money, as the dealers tend to recommend repairs that you have already had done. In addition, if you receive that multipoint inspection, watch the numbers from one visit to the next.
- Warrantied product receipts. This might include appliances, furniture, children’s toys, computers, televisions, telephones, other electronics, outdoor equipment, jewelry, etc. We staple the receipt inside the owner’s manual and file it in its respective folder. Use a filing system that works for you. Annually, we clean out the filing cabinet to eliminate those assets that have broken, been disposed of, or we otherwise determine we no longer need.
- Insurance Policies (Auto, Home, and Health). As these renew either annually or biannually, storing them in a filing cabinet is acceptable. In addition, you could choose not to store, as your online access will give you access to the most recent ones. One note of caution, there is a booklet of insured coverage for homeowner’s insurance that is only provided when you purchase the insurance, KEEP this booklet. I transfer it from one policy to the next.
Seven Years!
- Tax Returns and the associated support.
- Charitable Donation Support, Medical Expense Support, Gift Support, Large Purchase with sales tax
- Property Taxes
I keep this information with my tax return. Some support is electronic, and some support is hardcopy. I have a folder for each tax year in both my filing cabinet and on my flash drive. Even if you complete your tax return electronically through software, keep a copy handy, as it can be used to prove your identity.
Annually
- Purchase Receipts
- ATM Receipts
- Credit Card Statements
- Paid Utility Bills
- Medical Bills
- Bank Statements / Cancelled Checks
- Mobile Deposited Checks
- Pay Stubs
The new generation probably does not even keep this information, but I still reconcile both my credit card statement and checkbook bimonthly to the receipts of my expenditures. I do not take my ATM receipts, so there is no paper trail there. The only statements/bills I continue to receive in the mail are medical bills, and that is because none of my medical providers are offering online e-statements yet. I encourage everyone to go paperless and not have to worry about shredding this information.
For those paper bills you do still get, rebate checks you are now depositing through your mobile phone, pay stubs for your minor child, and if you are like me, your monthly receipts – save them in a shoebox. I keep for 3 years because that is what now fits in a shoebox, and then I typically burn them.
Shred Immediately
- Credit Offers
- Junk Mail
- Address Labels on ship to home purchases
Invest in a shredder. Shred everything that has your name and address on it that comes in the mail, including the mailing label on your purchases. This puts your name and address out there less.
Let’s Keep the Conversation Going!
What do you do? What are your tricks for keeping your documents up to date? Do you have a question about a specific item? What war story do you have that made you start saving that type of document?