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Organizing Your Important Documents

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New Year’s is behind us and tax season is here. As you gather all the necessary documents for your taxes, why not take the extra steps to get your files organized? Look at it as a late New Year’s resolution!

The task can seem overwhelming at first, but you will feel so much better once it’s done—trust us. The main reason why people don’t have their files organized is because they don’t know what to keep and for how long. After you finish reading, you won’t be able to use that excuse anymore!

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First things first: You’re going to need something to store your papers in. We recommend a filing cabinet, but you can also make do with a box. It doesn’t have to be anything fancy—just something that will get the job done.

Now, gather all of your documents. Yes, we mean all of them. Put them into one large pile, roll up your sleeves, and get busy! As you work through the papers, create five different categories:

Keep for 1–3 Months

  • Utility bills
  • Sales receipts for minor purchases
  • ATM and bank deposit slips

Keep for 1 Year

  • Checkbook ledgers
  • Paycheck stubs
  • Monthly mortgage statements
  • Expired insurance records

Keep for 7 Years

  • Bank statements
  • W-2 and 1099 forms
  • Receipts for tax purposes
  • Cancelled checks
  • Disability records
  • Unemployment income stubs
  • Medical bills/claims

Keep Indefinitely

  • Annual tax returns
  • Deeds, mortgages and bills of sale
  • Year-end statements for investments
  • Legal documents (birth certificates, marriage license, divorce papers, passports)
  • Home improvement documentation and receipts
  • Receipts for major purchases—for warranty and insurance purposes
  • Wills
  • Living wills
  • Power of attorney designation
  • Medical and burial instructions
  • Beneficiary directions
  • Real estate certificates
  • Automobile titles
  • Current insurance policies
  • Medical records
  • Education records
  • Pension plan records
  • Retirement plan records

Trash

  • Paycheck stubs after reconciling with W-2 form
  • Expired warranties
  • Coupons after expiration date

Next, file each category into a filing cabinet drawer or box. Clearly label what each file contains. Shred any papers that you don’t keep. It may take a little while to go through all your documents, but it’s worth it. Imagine how much less stress you’ll experience thanks to your life becoming more organized!

Learn about the other documents you should keep and organize in your Legacy Drawer.

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