Organizing Paperwork

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It’s easy to get overwhelmed by the sheer amount of paperwork that enters our homes. Knowing what to keep and what to toss is confusing at times, much less knowing what to do with the things you do decide to keep.

That’s why this particular mission spends two days organizing paperwork. For many it will take that long. For some, it may take even longer. Go at your own pace, but don’t put it off — with tax season just around the corner, this one is a necessary mission!

Step One: Identify the trash.

A quick rule of thumb is to keep only what’s very difficult to replace. But, as with most quick rules about organizing, if it were that simple we would all be organized already! Unfortunately, we tend to overthink these things.

When it comes to paperwork clutter, there are many things people hold onto needlessly. For brevity’s sake, things below that can go straight into the trash are designated with (T) and things you should shred are identified with (S).

Does an electronic copy exist? If you can find information online or on your computer, for example, you don’t need to retain a paper copy.

• Product manuals are easily found online if you look up the manufacturer and model number. (T)
• Receipts for online purchases are already in your email. Copy them to a file on your computer and toss the paper version. (S)
• Banking receipts like ATM receipts, credit card receipts, and deposit/withdrawal slips are irrelevant once you’ve checked them against your monthly statement. (S)
• Old pay stubs after you’ve received your W-2. (S)
• Paper copies of most bills unless you need them for tax purposes. (S)
• School papers from prior years and anything from the current year that doesn’t show final grades, due dates, upcoming events, or disciplinary action. (S if it has your address, otherwise T)

Is it strictly sentimental? In this digital age, it doesn’t make much sense to give up space in the home to sentimental things that can bring just as much joy in digital form.

• Old calendars merely take up space. If you need to remember a particular date, add it to your phone or computer calendar and discard the paper calendar. (T)
• Greeting or Thank You cards, especially if they don’t contain a personal note inside, are clutter. Take photos or scan the important ones, or cards containing written notes you want to remember. (T)
• Childrens’ artwork is always sweet to reminisce over, but if it’s a drawing or something readily digitized, you should scan it and let go of the original — while your child isn’t home to see you do it, of course. (T)

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Step Two: Identify Important Documents

Keep documents relating to government matters. It’s always a hassle visiting a state or federal government office to obtain copies, so hold onto the originals. (Also see, How to Organize Tax Documents.)

• Birth, adoption, name change, marriage, and death certificates
• Divorce Decrees
• Social security cards
• Immigration paperwork
• Tax returns — Keep the actual returns forever to prove you filed it, but you can discard supporting paperwork after the IRS’s 3-year statute of limitations for auditing expires. (Unless you omitted 25% or more of your income, in which case there’s no statute of limitation.)

Keep documents pertaining to your assets. You need physical proof that you own various things, along with documents pertaining to any loan or insurance on them. For example:

• Home mortgage documents and deeds
• Vehicle titles, licenses, registrations, and loan papers
• Insurance policies (home, auto, renter’s, health, dental, and vision)
• Year-end investment statements (Shred the monthly statements after you’ve matched them to the year-end documents.)
• Papers showing the purchase price of stocks and mutual funds
• Proof of IRA and 401(k) contributions, including 8606, so you don’t overpay when you withdraw funds

Keep documents relating to your death. It’s not a fun topic to think about, but it’s even less fun having to go through a loved one’s files to find papers pertaining to their passing. So, keep physical copies of things like:

• Your will and last testament
• Living wills
• Living trusts
• Powers of attorney
• Funeral plans
• Cemetery plot purchases
• Life insurance and other pay-on-death assets
• Where to find your computer and online passwords
• Letters to loved ones to be read after your passing

So, we’ve identified what you should keep and discard. Now it’s time to deal with the documents we’re keeping.

Organize It

Organizing paperwork takes a long time if you haven’t been keeping on top of it. Good thing this is a 2-day mission then, right? The following advice applies whether you’re filing paperwork digitally or physically — though I’d strongly encourage you to consider switching to digital storage if space in your home is at a premium.

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Step One: Digitize What You Can

In addition to a good shredder, an inexpensive digital scanner has practically become an essential of modern life. Scanners can connect to a cloud service if you’re comfortable with that, or you can scan directly to your computer.

(I prefer using a 2 terabyte external hard drive, which offers more space than I’ll probably ever need.)

Things to digitize include:

• Pay stubs until you receive your W-2
• Old social security statements
• Year-end retirement fund statements
• Year-end investment statements
• Annual insurance policy statements
  
• Home improvement records (until 3 years after the sale of your home)
• Repair and maintenance records for vehicles you currently own
• Warranties and related receipts until they expire
• Medical records

Keep your computer and backup updated! Every computer operating system — Windows, iOS, even Linux — issues security patches and updates on a regular basis. If you digitize your files, it is vital that you also keep your computer updated, and that you back up your data regularly. Even if you don’t digitize, you should routinely update AND backup your system.

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Step Two: File What You Are Keeping

Don’t just dump your paperwork all in one spot and call it done. Subdividing into files makes locating things easier, something that’s important if you have to quickly prove ownership or find your child’s immunization records.

If digitizing, create folders on your hard drive based on categories. Create sub-folders in place of paper file folders. As you scan documents, give them plain language names and move them to the appropriate sub-folder. (You can password protect sensitive files.)

If storing physical copies you’ll want some kind of file storage box or file drawers, along with hanging folders that will hold one or more individual file folders within it. A label maker is nice to have, too, if your handwriting is messy. (The photos above are what I use.)

Categorize paperwork and add subfolders/individual files:

• Home: Mortgage or lease, deeds, property tax info, homeowners or renters insurance
• Vehicles: Titles, loan records, insurance policy, accident records, maintenance and repair records, proof of sale
• Health Records: Health, dental, vision, and long-term care insurance policies, immunization records, prescription lists, flexible spending account information
• Financial: Bank statements (until year-end statement), tax returns, charitable deduction receipts, investment records, credit card statements, IRA or 401(k) contribution records, and 8606 forms, etc.
• Personal – Birth certificates, adoption paperwork, marriage certificates, divorce and custody decrees, social security information, passports, military records, year-end school records
• Estate: Will, living will, living trust, medical directives, funeral plan, cemetery plot information, info about locating your computer and online passwords.

NOTE: The documents in the Personal and Estate categories can be very difficult to replace. If you have a very large amount of such documents, a home safe might be a wise investment. Even a fireproof, waterproof document bag can keep your vital records safe and is a much less expensive option.

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Step Three: Purge Old Files

If you already have paperwork filed, go through each folder and throw away or shred items based on the information above. Holding onto paperwork longer than needed — even if it’s neatly filed — just adds to home clutter.

Step Four: Dispose of What You Aren’t Keeping

Once you’ve filed everything you are keeping, get rid of the rest right away. Don’t plan to do it later — it’s clutter, so we’re not holding onto it! Tie up the trash bag and put it wherever you store trash until pick-up day.

Then start shredding the sensitive stuff — you can even watch TV while you do it. Dump the shredder’s contents into another trash bag and put it with the other trash.

Clean It

Cleaning your home office should go pretty quickly once you’ve organized paperwork. Treat it as we’ve been doing with other rooms: if something doesn’t serve the function of the space (in this case: paying bills and filing paperwork), then it belongs elsewhere.

• Dust the ceiling walls, windowsills, doors, and baseboards.
• Dust lamps, lampshades, knickknacks, and tabletops.
• Polish glass surfaces.
• Empty trash cans.
• Vacuum or sweep and mop.

Keep it Clean

Keeping on top of clutter and mess throughout the rest of the house is an ongoing daily part of this program. It is not about re-cleaning — we’re simply tidying areas we’ve already ROCKed. So, grab the Daily Routine and buzz through it — you’ll only need 15-20 minutes now.