Keeping your paperwork organized has obvious benefits. After all, who wants to look at unruly stacks of bills that could instead be stored neatly out of sight?
But having a place for everything isn't just about aesthetics. Being disorganized can create extra work and subject you to late fees. The following strategies will help you bring order to your receipts, bills, and statements.
Leaving things scattered around the house is a surefire way to lose them, which is the reason financial experts recommend creating a command center. Ideally, this area -- whether a desk or another dedicated work space -- should encompass an ample surface, a computer, in-boxes for unpaid bills, files for long-term storage, a paper shredder, and office supplies. Other essentials include a comfortable chair and an appealing setting, because if you don't want to sit there, chances are you won't want to work there.
There are two phases of dealing with bills: paying and storing. If you're able to submit payment the moment you receive a bill, the first isn't an issue. However, most people must coordinate due dates with their pay dates. The most straightforward approach is to label two in-boxes with the dates of upcoming paychecks. As soon as you open a bill, put it in the appropriate box.
To keep track of bills after they've been paid, store them in file boxes or accordion file folders, organized by month rather than by type of bill. "People go file crazy, having separate folders for their cable bills, electricity bills, etc.," says Barry Izsak, former president of the National Association of Professional Organizers. "Its not necessary."
The deluge of receipts acquired each week can be overwhelming. "One of the things that causes chaos is that people don't know what they need, so they save everything," says Julie Morgenstern, author of "Organizing from the Inside Out." You can, however, get rid of many of these receipts immediately rather than stuffing them into your purse, wallet, or desk drawer. Morgenstern recommends creating an "automatic-toss list," including receipts for groceries and other everyday, non-tax-deductible items. You can save the ones you need to hold on to -- for appliances, medical expenses, and home improvements -- in a separate accordion file, also organized by month. To minimize paper clutter further, consider scanning your receipts and saving them digitally.
The beauty of a 12-month filing system is that at the end of the year, you can simply mark the year on the box or the file, and place it on a shelf.
There are, however, a few documents that should be stored separately -- and indefinitely -- including medical bills and claims, tax returns, investment records (such as year-end statements for retirement accounts), anything pertaining to property and valuables (including mortgage contracts and assessments), and legal documents (such as wills and those pertaining to estate planning). Make copies of these and other irreplaceable documents, including deeds, titles, stock and bond certificates, and certificates of deposit, and store the originals in a fire-resistant safe or a safe-deposit box.
After you set up your new approach, dedicate some time to its upkeep every week. "The best system in the world won't work if you don't stick to it," Izsak says. Aside from proper and frequent filing, perhaps the most important ongoing chore is purging unnecessary and obsolete paperwork. A good way to manage what comes into your home is to open your mail near a shredder or a recycling bin, so you can discard instantly anything you don't need to retain.
The rules for record retention vary depending on whom you consult. If you have the space, it's better to err on the side of caution.
Keep these for as long as you own the vehicle. Hold on to sales-transaction data for six years after the car is sold or traded.
After you receive the updated policy, shred the old one.
Warranties and Contracts
Toss them as soon as they expire.
After you receive a canceled check or a credit or bank statement, most bills and receipts can be shredded. For insured purchases, keep paperwork as long as you own the item.
Hold on to these until you've checked that the W-2 from your employer is correct.
Quarterly Investment Records
After you confirm that your annual statement accurately reflects your quarterlies, shred the latter.
Credit Card and Bank Statements
These can serve as proof if you file an insurance claim and as backup for tax documentation.
Receipts and Documentation for Tax-Deductible Purchases
The Internal Revenue Service can go back at least three years if good-faith errors are suspected, and indefinitely if it believes you have underreported your income by more than 25 percent.
These are useful references for checking income or medical claims from a particular year.
Save documents pertaining to closings, deeds, assessments, and home-improvement expenses.
Most IRA Contributions
Keep these in case you need to prove that you already paid taxes on this income.
Annual Investment Statements
Retain these until you sell the securities. Keep the record of that transaction indefinitely.
One way to minimize clutter is to eliminate paperwork.
Sign up for online banking and bill paying, saving statements to the hard drive. You can also use a computer to save scanned documents.
Turn paper documents, such as receipts, bills, and statements, into digital files with a scanner. Even an inexpensive one can achieve a resolution that's good enough for files that need to be archived.
External Hard Drive
Set up one to synchronize with your computer often, and back up your documents regularly. Look for an external hard drive that has twice the capacity of your computer's hard drive.
Transfer files (at least one year old) to CDs for long-term storage, and keep the discs in jewel boxes for protection. CDs labeled "archival" are less susceptible to damage.
More from Martha Stewart:
19 Tips for Perfect Laundry Every Time
24 Bathroom Organizing Tips You Haven't Thought Of
No Excuses: 30 Everyday Things You Should Know How to Do
12 Secrets for a Cleaning the Bathroom in Less Time
Now that your papers are under control, let's turn our attention to your closet.