Your Important Papers: What to Keep, What to Toss

Your Important Papers: What to Keep, What to Toss

How Much Time Do You Waste Looking For...?
The average American wastes 55 minutes a day (roughly 12 days a year) looking for things they own but can’t find. –Newsweek Magazine

The U.S. Postal Service attests to the fact that contemporary Americans get more mail in one month than their parents received in an entire year, and more mail in one year than their grandparents received in a lifetime.  Considering the sheer volume of paperwork sent to our homes, it’s no wonder there is so much confusion in discerning what matters. 

Have a Purpose
What does matter? Essentially, you need to keep paperwork for which you have a purpose.  Most paper – in fact 80% or more - has no future and can be recycled or shredded.  Ultimately, it’s most important to start the process and not get caught up in the end result.  Start with where you are with one small action.

As a Professional Organizer, I work with individuals, families, and businesses in transition.  Some transitions are moments of celebration occurring in times of merging households, starting families, launching businesses, and retirement.  Other transition points are more painful milestones like divorce, an unforeseen diagnosis, stepping into the care-giving role for a parent, or the death of a loved one.

In my work, I’ve observed that there are times when circumstances change in a split second.  Emergencies like a fire, flood, or theft can upend our lives and cause great financial and emotional stress.  When an accident or illness happens, our loved ones get thrust into having to make choices on our behalf, often while searching frantically to locate medical records, health-care power of attorney, and insurance policies, whether or not we have taken the time to create these critical resources.

Have Vital Records Readily Available
In any of these transitional circumstances, having vital records readily available makes all the difference between a relatively smooth adjustment and an unnecessarily stressful one.  If the stuff you need is buried amidst the stuff you don’t need, the experience is going to be painful.  Period.

The great news is that getting organized is a skill that anyone can learn.  The process allows for more freedom and happiness in your life.  It is not a one-time event, but rather a series of small, incremental steps to create lasting change.  

Why Do We Procrastinate?
There are countless reasons why individuals procrastinate organizing critical documents.  The statistics by the Consumer Reports National Research Center are revealing.  Only a small portion of the population – 16% - actually likes organizing financial records. 

Two Primary Stumbling Blocks
There are two primary stumbling blocks that the other 84% tend to encounter when organizing paperwork:  First, not knowing which documents are important to keep and second, not knowing where to store them. 

To jump that first “what to keep” hurdle, knowledge is power: understanding which documents you need to hang onto and which ones you can send to the shredder. With this in mind, your first step is to gather your papers. The next step is to divide them into meaningful categories using the framework below.

  • Paper to keep for one year or less
  • Paper to keep for a limited time or hold while active
  • Paper to keep for three to seven years
  • Paper to keep forever

What to keep for one year or less: bank records, credit card bills, current year tax records, insurance policies, investment statements, pay stubs, receipts. 

Based on your financial situation, be sure to talk to a tax advisor.

What to keep for a limited time or hold while active:

Contracts, home improvement records, life-insurance policies, loan documents, property records, records of pensions and retirement plans, stock certificates, vehicle titles.

Only discard items in this category once they expire or are sold.

What to keep for three to seven years:

Annual investment statement, income tax returns with supporting documents, medical bills and cancelled insurance policies, records of satisfied loans, records of selling a house, records of selling a stock.

The items in this category include personal federal and state tax returns and supporting documents.  Tax returns can be audited for up to three years after the date you filed the return. 

What to keep forever:

There are vital records that land in the “keep forever” category because those documents tend to be very difficult to replace and in some instances, impossible. 

The following list, while not exhaustive, is a good place to start to gather originals of the documents you need to keep forever:

  • Adoption Papers
  • Birth Certificate
  • Citizenship Papers
  • Death Certificate
  • Divorce Decree
  • Estate Planning Documents (Will and/or Trust, Health Care Directive, Power of Attorney)
  • Marriage License
  • Military Discharge Papers
  • Passport
  • Records of Paid Mortgages
  • Social Security Card

After you go through all the trouble of sorting your papers, you’re ready to tackle conundrum number two: “where to store them”.

Your Biggest Concern
The biggest concern you want to address with document storage is how to keep the documents safe and accessible.  While banks still have safety deposit boxes, off-site storage has become rare in the age of digital options.  In addition, most fireproof safes are too small to accommodate the essential documents.  If you have a safe, great.  If not, you will probably want to consider an easily accessible at-home solution.

At-Home Storage Option
While there are a number of at-home file storage options, I have found Smead's Life Document Organizer to be a well organized, easy-to-use, easy-to-maintain option (Full disclosure: Smead invited me to offer improvements to this product while it was in beta, so I'm biased -- if only because I provided input that I believe added to the product's usefulness).  If you prefer the DIY version, aim for an accordion file organizer, several dozen file folders, and labels.

Make absolutely certain that a loved one or trusted friend knows where to find your critical documents and any originals stored elsewhere.  If you have kept any records in a safe or lock-box, be certain this person also knows where to find the key.

Once you’ve tackled this project once, keep it current: Make a list of key papers, and then update it once a year or as you add and remove documents. In addition, make copies of the contents of the at-home organizer for easy reference so you don’t have to disassemble your critical documents when it comes time to say, buy a house or renew your passport.  Finally, to prepare for any eventuality, secure all your hard work with a once-annual scan to the cloud and/or to a USB flash drive.

Make A Date With Yourself
When it comes to the New Year’s resolutions of Americans, getting and staying organized ranks in the top five.  Make a date with yourself now.  Better yet, give yourself an extra hand and find a Professional Organizer to help you with your project. You can find one in your area at Whatever you do, just get started -- your future self will thank you for it.   

Beth DeZiel is Owner of Lasso LLC a Minnesota-based company that has a zest for organizing spaces, mixed with an aesthetic for style.