Personal files are always challenging but the best way to tackle the piles is stay on top of it and be consistent with your system. Follow these basic rules on personal file record retention.
Bank Records: Keep deposit and ATM receipts until you reconcile your bank account each month. Retain your monthly bank statements with your tax records to support your payments for your tax deductions.
Credit Card Bills: Once you have reviewed them and paid them, file any that support tax deductions with your tax records.
Tax Records: Retain tax records and supporting documents for 7 years.
Insurance Policies: File original policies until they are replaced when renewed.
Investment Statements: If your annual investment statement gives details of all activity of all transactions, you can shred the monthly and quarterly statements. Investment statements with cost basis should be retained until the asset is disposed. The documents then become supporting documentation for your tax return for the period when the disposal occurs.
Payroll Check Stubs: Keep the current year’s records until you have reconciled them to your annual W-2 form. Always keep at least 4 of the most current pay stubs for document requirements for possible financing needs.
Receipts: Maintain receipts for any purchases that include a warranty. Use credit card receipts to reconcile against your monthly credit card statement and then shred. Keep receipts for any possible purchases that might need returning. File receipts for all tax deductions with your tax records.
Loan Documents: Maintain until the loan is paid in full.
Warranty Records: Keep original purchase receipts with the warranty documents for major appliances, electronics, household repairs, or automobiles. The documents can be shredded when the warranty expires or the item is disposed.
Vehicle Records: Maintain receipts, registration and title information as long as you own it.
Permanent Records: Wills, Life Insurance Policies, Estate Planning documents, defined benefit plan documents, retirement plan documents should be retained indefinitely.
Stay on top of your piles and consider all paperless options especially for those items that you need to retain for the longest period or indefinitely. Have a simple system and be consistent with processing your paperwork. Happy filing!