Most people have a “pile” of un-filed bills, or “financial clutter”. It’s just one of those rainy day tasks we never feel like getting around to doing. The first step to knowing what’s going on with your money is knowing what you have and where. If you have a filing system, it may be clogged with bills from over 5 years ago. But, you ask, what can I throw away? The answer is: many things. But, don’t throw everything out, because you will need some documents in the future!

Here is one take on how long to keep certain documents from MSN Money:  See this article.

Generally, old utility and credit card bills can be tossed after a year, unless they are being used to back up deductions. For instance, if you are claiming a home office deduction and writing off a part of the utility bill, you should save it. You should hold onto your pay stubs for a year, until you get the W-2 summary for the previous year. For self-employed people or business owners, you should keep your documentation of your income and expense deductions for at least 7 years.

The IRS can audit your tax return for up to 7 years, but it is easy enough, and advisable, to hold onto those returns for ever, even if you decide to throw away the backup documentation after 7 years.

The most important documents to hold onto, such as car titles, and receipts or releases of mortgages, should be kept indefinitely. Ideally, car titles, marriage and birth certificates, wills and trusts, should be kept in a safe place or in a safety deposit box. Now, with computer backups, it is a good idea to have copies of these items backed up on a computer and a cloud backup system.

You can also sign up for automatic payments on some of the smaller bills, and also eliminate some paper bills. But, e-billing can only work if you watch your email carefully, and keep track. I prefer to have automatic payments on small bills such as phone bills charged to a card I pay each month, but still to have the paper bill sent to me so I can review it each month.

You will feel better if you eliminate the clutter in your life, so you can keep control of your finances. If you do it little by little, you can conquer the “paper tiger” of your financial life.

Daniel J. Winter
BankruptcyLawChicago.com
djw@DWinterLaw.com
Offices in Chicago, Gurnee, Oak Lawn, and Skokie, Illinois