Grownup Financial Organization

So, I figure a good time to assess progress on New Year's resolutions is near the end of the month of January. My major goal for the year is to simplify my life and get rid of some materials things I have stored in the nooks and crannies of my apartment.

I've had a box of stuff to donate packed almost since I moved in, but I've thrown a few more things in as the month progressed--a pair of jeans, a sweater.

Yesterday, I took a serious step towards decluttering. I decided to tackle the chaos of paper materials exploding in my desk. I have a drop desk, so I just close it up, and I can't see any of the mess. It's problematic.

While I was going through the desk, I shredded things I didn't need, made a pile of things to file, and I came across a little brochure that I would have been tempted to toss, but I glanced through it out of curiosity and decided to keep it as an aid in financial recovery post grad school.

It's called "Money Management for the Time-Pressed," and it was put together by the editors of Real Simple and Money. I think it is probably my mom's since she reads Real Simple. Too bad, Mom; this brochure is mine now. Anywho, it has tips on credit, saving for retirement, reducing your bills--lots of useful tidbits and some great tools to help you accomplish financial goals.

One of the little sections was called "Cut the Clutter"--the perfect section to help me with my New Year's resolution and insane desk. It offered advice on what documents you need to keep and how long to keep them. They point out that getting rid of extra schtuff takes a "psychic load off your shoulders." I could definitely use that. So here's what they recommend for what to keep and for how long:

• Tax returns--forever. I have no idea where my tax returns are from high school, but would they really audit me for the pennies I made in high school?
• Tax backup documents (receipts, W-2s, statements, etc.)--6 years because that's how long the IRS has to audit your returns.
• Year-end investment statements--until 6 years after you sell (this works out okay for me since I am and poor and have no money to invest).
• Pay stubs--until you get your W-2 in January. That's good to know because I had been keeping them for 5 years.
• Receipts for home improvements--until 6 years after you sell the home, for tax purposes. I don't have a home, but I'll try to remember this.
• Receipts for big-ticket puchases--as long as you own the item, for warranty and insurance claims. Note to self for someday when I can finally aspire to getting a gas stove.

So after I organized the desk, I applied these principles to my tiny little filing box. It took all day since my shredder died. I was hand-shredding and using scissors.

For filing purposes, it might be worthwhile to know that you should also be disaster ready with documents (not just money, insurance, and fire-escape plans). They recommended scanning the following documents onto CDs and keeping one at home and one in a safety deposit box:

• Driver's license, passport
• Social Security card
• Health insurance card
• Insurance policies
• Mortgage and other loan papers
• Property deed
• Car title and registration
• Marriage license
• Your will
• Last year's tax return
• Bank and brokerage account numbers

I can handle that. Easy peasy since I don't have health insurance (yet), a mortgage, a deed, a marriage license, or a will. That's like a third of the list I don't have to worry about.

So there's my de-cluttering accomplishment for the weekend. I shredded a bunch of files. Maybe next month sometime I will tackle the CD making.