I was taught that it was important for me to keep all owners manuals, warranties and receipts. My parents did this and it was just something I was taught to do as well. While I’ve not really ever needed any of them, there have been times when I was glad I did. It actually saved us money!
This past year, we were very thankful we did just that! We had a freezer which stopped working. Thankfully, we had the receipt and all of the paperwork necessary to contact the company and get a brand new freezer – at no cost to us! Had we not had that paperwork, it would have been a much more difficult process and we may have ended up having to replace it ourselves.
We also had an issue with our kitchen faucet. It started leaking. We had owned it for less than a year and figured that it was just bad luck. We actually went on line and looked up the cost of the replacement part. We were just getting ready to purchase it when I noticed a link about the warranty. That reminded me to check our files! I had to find the receipt, and since I kept good records, I was able to find it quickly which resulted in the replacement part being sent to us – free of charge!
It was in these moments that I was glad I had become so diligent with saving items. Doing so can also potentially save you money. If you are not sure how or what to save, here are some ideas:
HOW TO ORGANIZE IMPORTANT DOCUMENTS
1. File Box. This is the method we use (you can find the style of box HERE).I have several of these boxes and within them, hanging file folders. These are labeled so I can find what I need. The categories depend upon what you need. Here those we use:
2. File Drawer. If you do not have very many of these, you could easy find a file cabinet or drawer in which to store them. It is still best to keep them organized by category so you can find what you need when you need it.
3. Notebook. I actually tried this method and it didn’t work for me (you can read about that here). This does work for many and might be the best option for you. If you do decide to go with this method, I would recommend that you purchase higher quality STURDY plastic sleeves for your items (I think that is where I went wrong). You should still divide the items by category so that you can find the items when you need them.
4. Paperless. You can scan in items via a Neat Scanner or regular scanner. Then, create a file folder on your computer for these items and organize them accordingly. For example, create a folder called “Home Items”. Under that heading, make additional folders called Electronics, Appliances, etc.
HOW LONG SHOULD YOU KEEP YOUR IMPORTANT DOCUMENTS?
Now that you know HOW to store them, what should you keep and how long?
1. Tax Returns. Keep these for up to six years (along with any documentation). In order to ensure you don’t end up with too many, it is a good idea to take out the oldest return each year you file away the most recent one. For example, when you put away your 2013 return, you can take out the one for 2007 (and any prior to that time). Make sure you do NOT just throw it away. Make sure you shred all items! You can find a shredder for around $30 on Amazon.
(Note: If you have a unique situation such as a business or complex return, you may need to retain these for a longer period of time. You may want to consult with your CPA).
2. Owner’s Manuals. There is not really any need to keep these anymore since most of them are available online. I will admit that I still do as I still am old school when I need one and like to pull it out and read it. But again, you can toss these.
3. Warranties. You should always keep these along WITH your receipt (stapled together). By doing this, you will easily find the details about your warranty as well as have the documentation you need should it ever be needed.
4. Receipts. Most store receipts are valid for returns for up to 90 days. For big ticket items, it is good to always keep these and attach them (as mentioned in #3 above) or keep in a folder. If the item has a warranty, keep the receipt until that time has lapsed.
5. Bank Statements. There is no need to ever keep your bank statements as long as you have access to them online. If your bank does not have this feature, it is only necessary to keep them for one month. Some experts will recommend you keep these for a period of seven years, however, many times you could go to your bank and request old bank statements if necessary (i.e. in the case of an audit).
6. Bills / Credit Card Statements. If you use these to keep track of payments, you should keep them only until the next month’s bill arrives and you confirm the correct payment amount was applied to your account. These should always be shredded or destroyed. We actually do not keep any of these and shred all of them. However, we do scan in those needed for tax purposes so we have them as documentation.
7. Tax Items. As you go through the year, there are things you know you will need for your taxes. Rather than put them where you have to go digging at the end of the year, you could instead put them all into one folder. This is what we do. Receipts, purchases, etc, all get put into one folder. Then, come tax time, we have everything we need in one folder — no digging or researching necessary!
8. Medical receipts/insurance paperwork. These items should be saved through the end of each calendar year, in case you need to check payments to show deductibles, additional claims, etc.. If you include anything from the paperwork on your taxes, save those items with that year’s taxes. If any items are associated with Worker’s Comp, you should contact your attorney or CPA about the length of time to keep those records. In the case where you have had billing issues, you may wish to hold onto these longer (up to 5 years and more).
9. Pay Stubs. Keep one year’s worth of stubs. If you need to show proof of income, most companies will not require anything further back than this period of time.
10. Home Purchase, Sale and/or Improvements. It is always smart to keep the documentation for any investments (improvements) you make to your home. This can increase it’s value should you ever need to sell it. By keeping these, you can show proof of the work done, should it be needed.
If you have sold a prior home, you do not need to retain those records for more than one year. They can be discarded at that time. It is smart to keep all documents on your most recent home purchase, at least until such time as the home is paid in full (or you sell it).
11. Investment and/or Brokerage Statements. Keep those statements which show what you paid for any investments. Also make sure you keep any statements which show the reinvestment of any dividends. You will need to have these available at the time you calculate your capital gain or loss at the time you sell the investment. It is wise to keep all of these documents up to seven years after it is sold.
12. Retirement Account Statements. If the money is nontaxable, make sure you keep track so that you do not end up paying taxes twice. This includes IRA accounts. If you are not sure if you need to keep the statements, you may wish to consult your CPA. These should be retained until such time as all IRA money has been distributed. If you are able to easily access all information online, there is need to keep these in your files. Check with your investment firm or brokerage house for more details.
In order to ensure you purge items you no longer need (warranties that have lapsed, etc), make sure you go through your files at least once per year. The easiest time to do this is when you are filing away your most recent taxes. You are already looking at your files to do this, so just take a little more time and clear out those old items you no longer need.
What method do you use? I love new ideas on how to get organized!!