3 Down and 1 to Go: End of the Year Organizing

Day 282 of my Financial Freedom Countdown

Can you believe three quarters of 2010 has flown by already? The end of 2010 is upon us and I really want to end it with a "clean" slate. We won't be debt free this year, but we can end the year with a bang by keeping our finances tidy.

My wife hates clutter and she has no problem throwing absolutely everything away. I on the other hand like to keep everything. I am far from being a hoarder, but sometimes I feel like Monica from the TV series "Friends." Monica was known as a clean freak, but come to find out in one episode Monica used to hide tons of stuff in the hall closet. That's how I am. On the surface everything looks spotless, but if you look in our spare office or in the garage, you'll see a different picture.

I do on the other hand believe that orderliness begets wealth. If you have a pile of bills and statements, whether they are paid or not, it could be that you are clueless about what's coming in and going out. I do however, to my wife's amazement, know exactly where to find everything. For most however, unless you consciously open, read, and file away your bills and statements, you won't be connecting with your money and taking control of your financial life.

I am taking a week off to spend time with my daughter and work on my business rather than work in my business and part of this includes eliminating much of the clutter that drags me down.

I am going to start with loose statements and bills. If you would like to join me in this process I want you to grab the following:

• Monthly bills, bank statements, and pay stubs
• Investment statements (pension updates, 401(k) statements, brokerage and fund statements, etc.)
• Tax returns and supporting docs
• Policy documents and Deeds (insurance policies, home deed, car title, etc.)
• Warranties and user manuals
• Things to keep forever (marriage license, will, trust, birth certificate)  

I am going to use a combination of file folders in my file cabinet to store the majority of the statements in and I also have a water tight case to keep the forever documents in.

So how long should you keep all these items you just organized? Here's breakdown of the bills and statements you should keep.

Monthly Bills

• Utility Bills. Keep these for one year. If you claim a home business deduction like I do, keep statements for at least three years. Just in case the IRS inquires.
• Pay Stubs. Keep a years worth. Once you get your W2 and match it to your stubs. You can toss the stubs.
• Bank Account and Credit Card Statements. Keep these for one year. If you plan to buy a home or get a car loan any time soon you might want to keep two years worth.  Banks are triple checking income these days and you might have some explaining to do if things don't add up.

Investment Statements

• You may receive either monthly or quarterly statements as well as, a yearly statement. Once you get the annual statement get rid of the others.
• If you do any trading keep the record of these transactions for at least three years.
• Save the IRS form 8606 when making deposits to nondeductible contributions to a traditional IRA or conversions to a ROTH IRA. 

Tax Returns and Supporting Docs

• You should keep the the last three years of returns since this is the time frame that the IRS has to came back at you.
• If the IRS suspects you have not been reporting income you may need to show up to six years of returns. I think you should keep at least seven years of returns. Especially, if you own your own business or are self employed.
• The IRS does have  record keeping guidelines. Check out Publication 552 on their website irs.gov/pub.irs-pdf/552.pdf.

Policy and Deed Documents

• Keep the policy statements for accounts like your auto and homeowner's insurance. You should also keep the deed to your home and title to your car.

Warranties and User Manuals

• Save active warranties; likewise get rid of expired ones.
• I love to keep my user manuals, but for gadgets you no longer have be sure to toss them. You could really toss all your manuals as you can get copies online for most manufactures. Check out www.usersmanualguide.com and http://www.manualnguide.com.documents/.

Documents to Keep Forever

There are items that you should never throw away. Such as: birth certificates, marriage license, divorce decree, will, trust, estate planning documents, and death certificates.

Keep copies of all loans that have been paid off (mortgage, car, student, etc.). You never know what could resurface on your credit report.

I have my work cut out for me. Wish me luck.


Photo via (BetaInvestmentYogi)

[This post is written and copyrighted by Financial Elite (http://financialelite.blogspot.com/ ).]

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