How Long Do I Need To Keep It?

by Ramona Creel

The Cure

Fortunately, regaining control over your environment and sanity is easier than it seems. Remember the first rule of clutter — “the less you have, the easier it is to organize.” The paperless society is still a long way off — I can't guarantee that you will ever be able to eliminate paper from your life completely, but you can certainly reduce the size of the piles. Let's start by going through your old files and doing some cleaning out. I believe strongly that if you don't have a good reason for keeping it, get rid of it — but a lot of folks are afraid to ever throw document away because they might need it again “someday.” How do you define “someday?” I suggest that my clients as themselves some basic questions about why they are keeping their paper:    

  • Is the information relevant to my life, personal interests, or job?
  • Has this information become outdated? Can I find a more current document?
  • How easy would it be to replace this if I needed the information later?
  • What is the worst thing that could happen if I got rid of it?

That last question leads us to the subject of purging financial andlegal records. This is a sensitive (and somewhat scary) issue, becausethere could be some harsh consequences if you throw somethingout too soon. I agree that it's better to be safe than sorry, but fear is poor organizing guide. If you simply take the time to educate yourself about how long you are legally required to retain each document, you'll never go wrong. 

Records Retention Guidelines

In recent years, an entirely new new field of studycalled “records management” has arisen — dedicated to helping peopleunderstand how long they must keep certain documents. Based on theinformation gathered by this industry, I have compiled standardschedule for purging your files. But please understand that this is acomplicated issue (especially in today's litigious society), and each situation is unique. Many professions settheir own legal guidelines for records retention, and you may have someunusual or extenuating circumstance in your life — so check with youraccountant or attorney before pitching out any important legal,business, or financial paperwork.

You must keep the following documents forever (yes, forever!):
 

  • income tax returns
  • income tax payment checks
  • annual financial statements
  • books of account
  • corporate documents
  • stock records
  • retirement and pension records
  • licenses, patents, trademarks, and registration applications
  • investment trade confirmations and statements that indicate buying and selling
  • documents substantiating fixed asset additions
  • important correspondence
  • legal documents
  • CPA audit reports

Hold onto this paperwork for six years:

  • bank reconciliations and voided checks
  • canceled payroll and dividend checks
  • personnel and payroll records
  • purchase records
  • sales records
  • travel & entertainment records
  • supporting documents for tax returns
  • property records, builder contracts, and improvement receipts (if tax related)
  • sales receipts (if tax-related)
  • utility records (if tax-related)
  • medical bills (if tax-related)
  • other bills (if tax-related)
  • vendor invoices
  • supporting documents for tax returns
  • accident reports and claims

Keep these records for three years:

  • monthly financial statements (for internal purposes)
  • credit card statements
  • utility records (for internal use)
  • employment applications
  • expired insurance policies
  • medical bills (in case of insurance disputes)

You should retain these records according to the following guidelines:

  • car records (keep until the car is sold)
  • credit card receipts (keep until they have been verified on your credit card statement)
  • insurance policies (keep for the for life of policy)
  • mortgages/deeds/leases (keep for 6 years beyond the life of agreement)
  • pay stubs (keep until they have been reconciled with your w-2)
  • property records, builder contracts, and improvement receipts (keep until property sold)
  • sales receipts (keep for the life of warranty or the life of the item on large purchases)
  • stock and bond records (keep for 6 years beyond selling)
  • warranties and instructions (keep for the life of product)
  • other bills (until the payment is verified on the next bill)

Safely Disposing Of Paper

Just because you cleaned it out, does not mean that it goes in the trash! Did you realize that once you put something in a garbage can at the curb, it becomes public property? And reports of identity theft are increasing every day. When someone else gains access to your personal records (social security number, tax id, drivers license number, address, bank account information) and pretends to be you, the results can be disastrous. Using your identifying information, this person can take out loans, run up credit card bills, and run up a tremendous amount of debt — all in your name. And most times, you never know until you get the collection letter. It can take years to clear up the legal and financial problems this causes you, and it can temporarily ruin your credit.

So to protect yourself from this threat, be sure to dispose of your important records properly. Any piece of paper that contains account numbers, your social security number, or any other sensitive information should be shredded. If you only have a small amount of paper to destroy, consider visiting your local office supply store to pick up a personal shredder — they run as little at $20 or $30 these days. If you generate a large quantity of “shredable” paper, or just don't want to sit there feeding in one page at a time, think about using a mobile shredding service. These companies will come to your home or office and shred your documents on-site for a fee.  Just be sure that you choose a reputable company that provides you with a certificate or letter guaranteeing that your paper has been shredded unrecognizable.

Heading It Off At The Pass

Now that you've cleaned out all the old paper, your next goal is to keep from accumulating so much of it in the future. You may not realize it, but we receive approximately 1,500 to 1,800 pieces of junk mail each year — solicitations, flyers, sales letters, and other unnecessary bits of clutter. Ridiculous to the point of being obscene! You may think that you have no control over the mountains of unwanted paper that come to your home or office, but you're wrong. You can request to have your name removed from the lists that solicitors buy — effectively cutting off up to 75% of the paper that enters your life. I know, because I've done it myself, and I get next to no junk mail anymore. Contact one of the following organizations:     

  • DMA (PO Box 9008 / Farmingdale, NY 11735-9008)
  • Stop Junk Mail Association (800-827-5549)
  • Private Citizen (800-cut-junk)
  • Criss-Cross (8050 Freedom Pkwy. / N. Canton, OH 44720)
  • Consumer Research Institute (PO Box 612 / Ithaca, NY 14851)

Welcome To The Digital Age

Storing paper documents can take up a lot of space — have you ever considered getting rid of the hard copy? I'm talking about scanning the ones that you want to keep and storing them on your computer. Certainly, you should keep hard copies of some documents — contracts, legal papers, and anything requiring an original signature. But just think about all the other papers you own — copies of articles, reference items, reports, some correspondence, maybe even client records. Document imaging software has become ridiculously cheap these days — and you can store 100 times more paper on a disk or CD-Rom than you can in a file drawer. Just make sure that you keep a backup copy of anything important in a fire safe or safe deposit box.

© Ramona Creel, all rights reserved. Ramona Creel is a modern Renaissance woman and guru of simplicity -- traveling the country as a full-time RVer, sharing her story of radically downsizing, and inspiring others to regain control of their own lives. As a Professional Organizer and Accountability Coach, Ramona will help you create the time and space to focus on your true priorities -- clearing away the clutter other obstacles and standing in the way of that life you've always wanted to be living. As a Professional Photographer, Ramona captures powerful images of places and people as she travels. And as a travel writer, social commentator, and blogger, she shares her experiences and insights about the world as we know it. You can see all these sides of Ramona -- read her articles, browse through her photographs, and even hire her to help get your life in order -- at www.RamonaCreel.com. And be sure to follow her on Twitter and on Facebook.