Organize important documents
Tax filing deadlines inspire many of us to vow that we’re finally going to organize our papers.
Start with understanding what should be kept, in what format and for how long. Then, set up a system to organize your records. It doesn’t have to be all-encompassing or perfect.
Organizing will help ensure you or someone you trust can access documents when needed.
Saving documents
Gather documents you should keep forever:
■ Birth, adoption and death certificates.
■ Marriage certificates and divorce decrees.
■ Social Security cards.
■ Military service and discharge records.
Next comes documents you may need for many years:
■ Property deeds and vehicle titles, until sold.
■ Records of home purchase, improvements and expenses, usually until three years after a property
exchange transaction.
■ Current insurance policies and business licenses.
■ Current will and trust documents, and retirement benefit information.
■ Then, think about tax documents, which you need to save for three years after filing. Certified public accountant John Madison of Ashland, Va., said the following documents are a start:
■ Investment information, including when you bought and what you paid.
■ Medical expense documentation, including health spending accounts.
■ Business-related receipts.
■ Receipts for charitable contributions.
Organize records
First, the bad news: Throwing everything in a shoebox is not an organizational system.
“The shoebox works for no one,” said Lynnette Khalfani-cox, aka “The Money Coach” author and former journalist who covered financial topics. Khalfani-cox admits that she has done it, too. She said the shoebox is “a way for people to ‘maintain’ records without putting in an infrastructure and the initial hard work of organizing.”
Setting up a filing system can save time and money in the long run, Khalfani-cox said. You’ll be able to find supporting information for tax deductions, for example, or receipts to claim warranty or price protection.
Decide whether you’ll organize by topic or year. You may want a physical filing cabinet filled with folders, or a digital version to hold electronic or scanned copies. You can begin to digitize some records by choosing paperless billing and electronic delivery of statements. Then, download those statements as PDFS and drop them into your digital filing system.
Keep documents safe
Because these documents contain so much personal data, they’re a gold mine for identity thieves.
Paper documents should go into a locked location. Crucial items — such as birth and marriage certificates, titles, wills, insurance policies — are candidates for a safety deposit box or fireproof safe. Store the safe “somewhere not obvious in the case of a break-in,” Madison said, and keep digital copies of its contents.
When it’s time to get rid of documents, shred them — it’s a simple way to prevent identity theft.
Once you’ve made digital copies of the papers in your safe, you may feel comfortable enough to switch from paper records to electronic. It saves space and eliminates the need to shred.
Digital files should be locked and/ or password-protected or kept on a removable drive. Finally, tell someone you trust how to access your files in an emergency.