Tuesday, March 22, 2011

Paperless March: Files

Yep, it's spring! With spring comes the dreaded-for-most tax deadline on April 15 (extended to April 18 this year for Federal). Tax time is a great opportunity to re-assess (or create, for some) your filing system. We're digging through our paperwork anyway, so why not do some sort/purge/organize action while we're at it?

One of the most popular paper organizing questions I get from my clients is, "Do I need to keep this?" For most people, the answer is no about 90% of the time. Ask yourself the following three questions to speed up the decision-making process:

1. Do I need this piece of paper for any legal reason? If not, you can likely toss it. Old bills - toss. Old checking account statements - toss. Tax return info older than three years (the time the IRS has to audit you) - yep, toss. Some of us have more complex legal and/or financial situations than others. Always refer to your CPA or lawyer for official keep/toss guides on paperwork if you're not sure. Shredding before tossing paperwork with personal information is a smart idea to prevent identity theft.

2. Can this information be found elsewhere? Most of it can. The Internet, the library - the bank in the case of financial statements. The more unnecessary printed information you can part with, the easier it will be to find what you're looking for when you need it.

3. And finally - what's the worst thing that could happen if I toss this piece of paper? Typically, nothing less than a feeling of euphoria for paring down the clutter.

Once you've sorted and purged the paperwork, it's time to file it. The key to a good filing system is to keep it simple. Create a few basic categories - i.e., "automotive, family, home, insurance, medical, taxes, etc". Within those broad categories, create subcategories (if you need to) - i.e., "automotive - repairs" and "automotive - loan". The only rule for category creation is to be consistent. Label files in a way that makes sense for you. A professional organizer can help you paper-purge and set up a good filing system.

So you're one of those people who already has their paperwork totally organized and pared down? Great! Care to take things to the next level of green and easy? Consider scanning and storing your files online. Shred and recycle the originals, and your load just got a lot lighter! Plus, you can access your information securely from any computer with Internet access. I use Google Docs for mine, but there are many online file storage options available.

Kristen Ziegler

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