Tackling the Paper Clutter!

My goal in January was to tackle all my paper clutter. I tend to be pretty organized but I also have a habit of keeping EVERYTHING! I keep all receipts, paid bills, statements....everything. And I have done this for years and years. Yeah, I know, sick right? 

I also realized that some of you need a simple way of gaining control of your paper clutter. Just one late payment can cost a lot of money in late fees and maybe even reconnect fees. This can be exasperating when the only thing that caused it was the lack of some basic organization.

And I know how frustrating it can be when you need to find something quickly, say the manual for your washing machine, and you have no clue where to start looking for it.

So the first thing I had to ask was what do I really NEED to keep? I mean, do I really need to keep every receipt? Well, that's a good question...  The chart below is from  USA.gov . (You can print it here)

How Long to Keep Documents
DocumentHow Long to Keep It
Bank statements1 year, unless needed to support tax filings
Birth certificates, marriage licenses, divorce decrees, passports, education records, military service recordsForever
ContractsUntil updated
Credit card recordsUntil paid, unless needed to support tax filings
Home purchase and improvement recordsAs long as you own the property
Household inventoryForever; update as needed
Insurance, lifeForever
Insurance, car, home, etc.Until you renew the policy
Investment statementsShred your monthly statements; keep annual statements until you sell the investments
Investment certificatesUntil you cash or sell the item
Loan documentsUntil you sell the item the loan was for
Real estate deedsAs long as you own the property
Receipts for large purchasesUntil you sell or discard the item
Service contracts and warrantiesUntil you sell or discard the item
Social Security cardForever
Social Security statementWhen you get your new statement online, shred the old one
Tax records7 years from the filing date
Vehicle titlesUntil you sell or dispose of the car
WillUntil updated

My goal was to get everything into one desk file drawer. I was using three very crowed drawers before reorganization.

TIP. Get into the habit of going through your mail as soon as you bring it in the house (or as soon as you can after that). Open each envelope and throw the envelope away. Throw all the empty envelopes and unwanted ads away (shred credit card invites) and immediately move bills, statements, or other "keepables" to a designated area such as your file.

So here is how I did it, yep I tamed my paper monster and so can you!

Step one...buy a good shredder and an expanding accordion type file folder. You want a shredder that will shred small enough to protect your identity. They can be pricey but worth it. As for the file folder, this is totally up to you. A simple inexpensive one will work great but there are also some really cute ones out there in bright colors and designs. Note: if you have a desk with a file drawer you can use that instead of the expanding folder. In this case you just need to buy hanging file folders and regular file folders with tabs. Also, make sure you have new labels.

Step two....get all your paperwork together. Gather it up from wherever you have it, in your kitchen drawer, in your purse, in your car! Get it all together.

Step three....this is the messy part. Begin to go through it all. Throw out expired coupons & ads, and anything else you know you won't need. Shred anything like credit card offers.

Step four...Start basic piles for "bills", "receipts", "legal", "statements", and any other special piles you may need. When you are done everything should be in one of the stacks or in the trash. Put any unexpired coupons and ads that you need to keep aside. If you tend to keep a lot of these you can either purchase an organizer made just for coupons or put them in an envelope that will fit in your purse. That way you will always have them with you when you go shopping.

Step five...Set up your filing system. Begin by creating the following file folders.

Active: These are records you use on a regular basis.
  • Unpaid Bills
  • Paid Bills
  • Needs Attention
  • Bank Statements
  • Credit Card Statements
  • Manuals & Warranties 
  • Receipts for items under warranty
  • Receipts for Tax Deductions
  • Pay stubs (toss after reconciling with W-2)
Inactive: Don't set these up quite yet. These would be records that you need to keep but only refer to or use occasionally. After examining your records decide how these folders should be labeled. The following are only suggestions. The main thing is that important papers are filed so they can actually be found quickly when you do need them. If you want to be a little bit fancy you can set up these files using a different colored file from the Active folders.
  • Education records, diplomas
  • Health Insurance Policies
  • Auto Insurance Policy
  • Loan Contracts

Step six...Tackle each pile...

Bills.....Separate this pile into two piles for paid and unpaid. Example of bills are utility bills, car payments, care insurance, and medical bills. Do not put things like your auto insurance policy in this stack. You may be making monthly payments to say Geico and twice a year you may also get a new policy from Geico, but that doesn't mean they need to go into the same folder. We will discuss where to put policies, auto loan papers and other items later but for now they should be in the "Legal" stack.

Put the unpaid bills in the "Unpaid Bills" Folder.  Note that you will need to work this folder regularly and set up a scheduled day to do so. The day before payday may work well for you. Right now we are just getting all this organized, we'll talk later about how to maintain it and keep it all under control

Now go through the paid bills and see which ones need to go into your "Paid Bills" Folder . Regular monthly bills that are paid can usually be thrown away once you receive the next bill and proper credit was given. For example, only keep the paid water bill for December until you receive January's bill showing no previous balance.  So, as you pay the bills in the "Unpaid Bills" folder move them to the "Paid Bills" folder and throw away the one from the previous month. Okay, this works great for bills that come due each month, but what about other bills? Again, if they are unpaid they go in the "Unpaid Bills" folder and move them to the "Paid Bills" for as long as needed. Remember all paid bills should be kept for 7 years if needed for tax information and longer than one year if for a major repair or service. BTW, if you happen to have any receipts for paid bills you may want to just staple them right to the bill. Receipts for appliances and major purchases should be kept as long as you have the item. I have found a good place to keep these is with the corresponding manuals or other paperwork you have for that item.

You may find you need special files for some bills. The idea is to keep any one folder from becoming so full or cluttered that it ceases to be efficient. For example if you have a lot of medical bills, you may need to set up separate files for them where you can keep insurance payments to the medical facility as well as payments you have made and notes of any conversations with insurance company representatives or the medical facility regarding amounts due. This is just an example and we each have our own needs. If you have anything that needs supporting paperwork I would recommend a separate file folder for that bill.

"Needs Attention" Folder....This folder is for all those things you need to take care of but haven't yet. Examples are bank statements that need to be reconciled, rebates that need to be mailed, anything you need to "take care of". It is important that this file, like the "Unpaid Bills" file is given regular attention, be careful of the "out of sight out of mind" mindset. This is why we are setting up a designated file just for these, if they were filed somewhere else it may be very easy to forget them.

Receipts for anything you have paid for with a bank debit card will also need to be kept in the "Needs Attention" Folder. Unless you take the time to write each of these transactions in a check book register you will need these receipts to balance your checkbook once your statement arrives. Also, if you keep track of expenses using an accounting software program, you will need to keep them until they have been entered. Did I just hear you say, "I don't balance my checkbook"? Tisk, tisk, is all I have to say. lol  Actually, whatever works for you, I'm not here to judge.

"Bank Statements" Folder....The table above recommends you keep bank statements for one year unless needed for tax records. So you will have 12 statements in this folder. If you receive statements from different banks or accounts you will need to set up separate folders for each. Each month when a new statement arrives you will immediately file it in the "Needs Attention" File. Once you have reconciled the statement you will place it in the front of this folder. At the same time you will remove and shred the last and oldest one in the file. That way you are always keeping each statement for one year.

"Credit Card Statement" Folder...If you have a credit card then you will need this folder. Even if you have multiple accounts you can probably get away with just one folder because you will only be keeping each statement for one month (unless needed for tax purposes). When you receive a new statement and balance your account, you will shred the previous months statement.

Inactive File Folders....These will come from the Legal pile. This pile will take a little more thought. Some things will need to go into a safe place like a safe deposit box. Examples would be a Will, Power of Attorney, Birth Certificate, Marriage Certificate, Deeds, and Titles. I would not keep them in your folding file folder. I would at least put them in a protective box and put somewhere you consider safe.

Other paperwork like current Insurance Policies and Loan Contracts should also be filed in your filing system. These will be put in the Inactive File Folders described above. There is no need to go into deeper explanation as only you will know what files you need.

Okay...so now everything should be cleaned up and filed away? Right? You should feel very organized....an organizational diva in fact. I always do anyway.

Just a word here about electronic record keeping. I have been using Quicken since 1993. I like knowing where my money is going and I like being able to track what I actually spend on individual expenses like groceries or pet care. But it is work and takes some effort to set up. I'm not necessarily recommending Quicken over other programs, its just the only one I have ever used. There are many good software programs available that will help you with a household budget and bill paying. Just remember this...just like any good exercise video, it will only work for you if you take time to do it.

No matter what system you use it will only be as good as how well you keep up with it. If you continue to throw your electric bill on the kitchen counter hoping you remember to pay it before its due, you will be fighting against yourself. Take some control, keep your folder where is is easily accessible and USE it.

The system I have described is a very basic and uncomplicated way to tame your paper monster. I welcome your comments and suggestions. ♥

Note: You can create some really cute and customized file labels at Avery.com!


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