Starting Anew in the New Year...

What to Keep and What to Shred

With the long list of imagined home improvement projects we had dreamt up finishing while on vacation, we only completed one major project: emptying and organizing the closet. Hidden in the back of our walk-in closet were shoe boxes filled with financial documents accumulated over years of working as a freelance graphic designer; every receipt, invoice and a miscellaneous amount of "why the heck did I keep this?!" paperwork stored haphazardly and with the obsessive quality of a squirrel storing away nuts for the winter. Above is the greater portion of what was shredded over the span of two days (an additional 2 1/2 bags were thrown into recycling the first day)...

Okay, so you admit you're like us and have a secret cache of papers and documents that is threatening to take over your storage/office but you're unsure what you can shred and what you should keep? Here's some tips from Jenny C. McCune of Bankrate of when to shred and when to store away:

    Taxes
  • Returns
  • Canceled checks/receipts (alimony, charitable contributions, mortgage interest and retirement plan contributions)
  • Records for tax deductions taken
  • Length of time to keep: Seven years
    IRA contribution records
  • If you made a nondeductible contribution to an IRA, keep the records indefinitely to prove that you already paid tax on this money when the time comes to withdraw.
  • Length of time to keep: Permanently
    Retirement/savings plan statements
  • Length of time to keep: From one year to permanently
    Bank records
  • Go through your checks each year and keep those related to your taxes, business expenses, home improvements and mortgage payments.
  • Shred those that have no long-term importance.
  • Length of time to keep: From one year to permanently
    Brokerage statements
  • Length of time to keep: Until you sell the securities
    Bills
  • Go through your bills once a year. In most cases, when the canceled check from a paid bill has been returned, you can shred the bill.
  • However, bills for big purchases -- such as jewelry, rugs, appliances, antiques, cars, collectibles, furniture, computers, etc. -- should be kept in an insurance file for proof of their value in the event of loss or damage.
  • Length of time to keep: From one year to permanently
    Credit card receipts and statements
  • Keep your original receipts until you get your monthly statement; shred the receipts if the two match up.
  • Keep the statements for seven years if tax-related expenses are documented.
  • Length of time to keep: From 45 days to seven years
    Paycheck stubs
  • When you receive your annual W-2 form from your employer, make sure the information on your stubs matches.
  • If it does, shred the stubs. If it doesn't, demand a corrected form, known as a W-2c.
  • Length of time to keep: One year
    House/condominium records
  • Keep all records documenting the purchase price and the cost of all permanent improvements -- such as remodeling, additions and installations.
  • Keep records of expenses incurred in selling and buying the property, such as legal fees and your real estate agent's commission, for six years after you sell your home.
  • Length of time to keep: From six years to permanently

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