What should I shred?Now that all the holiday hubbub is over, this is one of the best times of the year to do a paper purge.
You'll soon be receiving 2011 year-end financial statements - and the 2012 papers will be flooding in almost at the same time. (Of course if you've made the switch to on-line statements, you will have much less paper to deal with.)
Follow these steps to clear out and organize your 2011 papers and you'll be well prepared for the new year.
Related: 9 Financial Rules to Live By
Before purging, identify broad categories for your 2011 papers and you can organize as you go. Here are some recommended categories for the types of papers that it's best to keep together by year:
Financial statements: Sort them as follows:
- Credit cards
Taxes: These are the most common categories of paper related to taxes:
- records of income
- interest and dividends
- charitable donations
- deductible expenses
- information related to capital gains and losses
- real estate-related papers
Medical: Particularly if you have a flexible spending account, you'll want to track your medical expenses on a yearly basis.
Related: Craziest Tax Deductions
While I recommend manila folders and hanging files to organize your papers, you can use accordion folders, large envelopes, zip-top bags or even the tried-and-true shopping bag method. They most important thing is to group similar papers and label them.
As you group your papers by category you can toss, recycle, or shred the old. I recommend shredding anything that has an account number or social security number on it.
These can go:
- Paystubs, once you get your W-2 statement
- Monthly financial statements, once you have the year-end summary
- ATM receipts once you get your bank statement
- Random receipts that aren't tax-related and that are for items you won't be returning - food, clothes, restaurants, gas, etc.
- Phone, utility and cable bills (unless you use them for budgeting)
- Expired insurance policies
Related: Is Your Bank Tracking Your Purchases?
Double check with your accountant or financial advisor if you have any questions about what to get rid of.
For now, just focus on organizing these annual papers, which have financial and tax consequences. Set aside the interesting information and recipes you've clipped, notes for your next great business idea, and memorabilia. The government has no interest in your collection of travel articles, but before you know it spring will be here and you'll be glad to have your 2010 papers in order when tax season begins.
More from GalTime:
- What's Your Money Style? (Find Out Here!)
- 5 Frugal Ways to Save in the New Year
- Could Bad Credit Cost You A Job?
- 25 Ways to Save Taxes through Life's Transitions