When you make the decision to downsize to a smaller home, you will need to rethink your piles of paper. This is especially important if you are moving from a home with a large home office to one with a workspace the size of a closet.
Sorting through piles of accumulated paperwork in folders and cabinets can be time-consuming and overwhelming. Here are some tips from Jeanne Taylor, Houzz Contributor, for dealing with specific categories of paper, as well as ground rules on what you should keep and what you should shred or recycle before you move. (https://www.houzz.com/magazine/simplifying-which-papers-to-keep-and-which-to-toss)
Papers to Keep
The top items on a “must keep” list are those records which would be difficult to recreate. Included on this list are:
Some documents can be more difficult to replace, such as birth and death certificates, adoption papers, marriage licenses, divorce decrees, estate plans, Social Security cards, passports, records of paid mortgages and military discharge papers. Only 17 states currently allow you to obtain a new Social Security card online, according to the Social Security Administration. The majority of states require you make a trip to the Social Security office and bring several official documents that prove your identity.
Consumer Reports advises that is best to keep car loan documents until the loan is fully paid off and to keep title documents for the car(s) you currently own. Be sure to file all repair and service records. You will want to show these to a potential buyer when you sell your car so that the buyer can be confident that your vehicle was properly serviced and that your vehicle comes with an uncomplicated ownership history.
Personal Tax Returns
According to the IRS, in most cases, personal tax returns should be saved for three years. However, special circumstances might require you to save your returns for up to seven years. Check IRS.gov or talk to a tax professional for specific examples that might apply to you. Given the clear guidelines, you can feel confident about getting rid of any tax returns and supporting documents that are older than three to seven years.
The best place to keep these documents is either in a bank safe deposit box or in a fire-safe box in your home – that way you can easily put your hands on these important records when you need them.
Papers to Toss
According to Ms. Taylor, you can get rid of many paper records that formerly were necessary to hang on to – bank statements, retirement account statements, etc. For those who would still prefer to keep some hard copies, you can still whittle your stashes of papers in the below categories by quite a lot.
Bank, Mortgage, Investment, Insurance and Retirement Account Statements
To avoid excess paper in the future, you might consider signing up to receive statements electronically. Records typically can also be accessed on a bank or investment firm’s website. Many banks make records available at no charge for 10 years; you’ll want to check with your bank for its policy. Be sure to keep a hard copy of your account number, customer service phone number, user ID and password. Another option is to place this information, whether in a paper printout or an electronic storage device, in a home safe.
If you are uncomfortable going paperless, keep your year-end statements but shred your monthly and quarterly statements. One caveat is investments in stocks, bonds or mutual funds purchased before 2013. You may want to keep purchase confirmations until you sell the investment so you can establish your cost basis and holding period for tax purposes. Government regulations require investment firms to keep track of your cost basis after 2013 for many types of investments. In addition, before you shred any documents, check with your retirement investment firm to make sure they have a record of pretax versus after-tax contributions. You will need this information when you retire.
Feel free to recycle appliance manuals when the new appliance arrives. Most appliances have a sticker inside the door with the model number listed on it, and care and use instructions and troubleshooting guides usually can be found on the manufacturer’s website. If you do prefer to keep a hard copy, one good way to cut down on the paperwork is to save manuals only for major appliances. Consider storing all manuals in one file so you can find them easily.
Credit Card Statements and Utility Bills
If you are comfortable with electronic records, there is no need to keep credit card statements and utility bills after you have paid them — unless you need the paper copies for tax purposes. Consider signing up for paperless delivery of future bills, as well as having bills paid automatically from your checking account. You’ll want to keep a record (again, either paper, external hard drive or portable disk drive) of the account number, customer service phone number and website login information in a secure place, such as a safe. If you are not comfortable going paperless, you only need to keep credit card and utility bills necessary for tax deduction documentation. Store these with your tax returns.
It is personal preference as to whether you keep your pet’s immunization and other records or trust your veterinarian to do so for you. One option to eliminate paper is to scan records into your computer. You can simply recycle the hard copies of this information after you scan.
Bottom Line: No papers should ever be anywhere except the inbox or in your filing system whether online or in a safety deposit box. It’s simple and efficient. Create a simple system and you eliminate the clutter and the worry.
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