Denton suggests you begin your organizing by setting up a place you can keep your bills until you pay them. As soon as a bill comes in, for example, put it in a folder labeled "bills to pay." Then set an electronic calendar reminder for a time when you're going to sit down and pay them. Store the documents listed below in a file cabinet. You don't need to keep other bills.
If you don't pay your bills electronically, now may be a good time to set up online banking. "That way you can schedule your payments in advance, and even set up monthly bill payments for amounts that don't change, like your mortgage, so you won't be late," Denton says.
To help avoid identity theft, shred anything you plan to throw away that contains personal data. More than 50 percent of the people we surveyed said they put documents through a shredder before they trashed them. Look for a crosscut shredder rather than a strip one, which leaves long paper bands that could be reassembled.
Documents that you have no long-term need to keep include:
Keep deposit and ATM receipts until you reconcile them with your monthly statements. File your monthly checking and savings account statements. After you do your taxes, file any statements needed to prove deductions with your tax records; the rest can be shredded.
You don't need to keep them after you've checked and paid them, unless you need a bill to support a deduction you'll be taking on your taxes, such as for a charitable donation (in which case you'll need to file the bill with your current-year tax records). If an item you've charged is under warranty, keep the bill until the warranty expires. Staple the credit-card bill to the warranty document and put it in a file with other warranties; you may need the bill as proof of purchase if the item needs repair.
Current-year tax records
Keeping your records organized can save you headaches and money at tax time. Tax preparers might charge more if you give them a disorganized shoe box full of papers. Place documents you'll need for your next return in a file. If you need to save a lot of receipts and bills, use a standing accordion file.
Keep policies that you renew each year, such as those for your home, apartment, or car, until you get new policies, then shred the old ones.
You can shred your monthly and quarterly statements from brokerage, 401(k), IRA, Keogh, and other investment accounts as new ones arrive. But hold on to annual statements until you sell the investments. You may want to have separate folders for traditional and Roth accounts to help you keep track of amounts that are deductible and nondeductible for tax purposes. Better yet, sign up for electronic statements if your financial institutions offer them.
Keep the calendar year's records until you reconcile them with your annual W-2 form, then shred them.
If you're not doing anything with your receipts—like tracking your spending, itemizing tax deductions, or using them to return purchases—you can get rid of most of those little scraps of paper immediately. If you need to keep them on hand so you can verify amounts against your credit-card bills or bank statements, create a folder labeled "receipts" and keep it with your bills-to-pay folder. That way you'll have your receipts handy when you pay your credit-card bills. If you think you might return something, ask the salesperson how long you have to decide, and jot down the date on your receipt.