Simply Put Organizing

Organized Taxes

Suze Orman stated, in an article I read, that she had a ‘surefire way to build wealth’ that won’t cost a penny. So easy, she stated, that it can be done while watching television. Her suggestion, clean up old financial paperwork that serves no purpose other than attracting dust-I couldn’t agree more!!

If you live out of piles of paper and your file drawers are full it’s time to clear out the clutter and create a simple system to take control of your financial future. Suze Orman is a firm believer that orderliness begets wealth. I’m not so sure about that (I should be a zillionaire), but I do know that you will save quite a bit in late fees and have a much better idea what is going in and out of your bank accounts if your statements and bills are in order. Organizing paper is completely overwhelming for most of us I’ve tried (along with advice from Suze Orman) to take the overwhelming feeling out and make it as simple as possible.

What you’ll need: a crosscut shredder to prevent identity theft, a garbage can to toss non financial paper and an a few boxes of hanging file folders and a table designated for sorting. If you can borrow a banquet table for this process you can work on it over a period of days without feeling like it’s in the way. If you don’t know anyone with an extra table to share then try to designate an area of your home for the purpose of this task.

Sort all your papers into six piles:

§ Monthly bills, bank statements and pay stubs

§ Investment statements

§ Tax returns and support

§ Deeds

§ Warranty and User Manuals

§ Forever Docs such as marriage licenses, wills and birth certificates

If you have a file cabinet in your home, label one drawer finances. I am a huge fan of filing bills in a twelve month system. Label one hanging file folder for each month and sort bills that you have paid into the month they were paid. The reason I like this method is that you can go back to any month and see your total expenditures. I also store my bank statement into the same file. Basically you will have a snapshot of your finances for any given month at your fingertips. At the end of the year you can pull out anything you need for tax back-up from each month and the rest can stay in the self purging system. When January 2011 comes around you shred the contents of January 2010 the same with February, March etc. You will always have a year’s worth of financial documents at hand.

The other option, and it’s not one that I recommend is to make a separate folder for each bill you pay. The caveat here is that you have to remember to empty the folders on an annual basis. If you don’t have the discipline to do this your files will soon by overflowing with paper you no longer need. For those disciplined souls this method is fine.

Edit the Piles

For all the paper you are eliminating from your piles, I highly recommend running through a crosscut shredder. The FTC estimates that up to nine million Americans a year are victims of identity theft. A good shredder will help protect your financial future.

It is important to know what to keep and for how long. Suze Orman has a great cheat sheet on her website Here are some of her suggestions for financial papers:

Bills: one year’s worth. Put tax deductable bills in an accordian file by month so they will be ready when you do your taxes.

Pay stubs: one year. When you receive your W-2 make sure that your last check stub matches then shred the stubs.

Bank Statements: One year at least. If you are planning on applying for a mortgage or car loan it is better to keep up to two years. Again, check with your personal accountant if you have any questions.

Investment Statements: save all monthly and quarterly until you receive your end of the year summary and then shred the others. Save the documents for any trades you make during the year for three years.

Tax returns and supporting documents: The IRS has three years to challenge anything on your returns. Keep three years at all times. If the IRS suspects you haven’t reported income it can challenge returns up to six years. To learn more about IRS record keeping guidelines, see Publication 552 on their website (

Warranties: Keep only active warranties and toss the rest. I suggest tossing all user manuals you don’t actively refer to as manufacturers have downloadable versions on their sites. You can also visit or

Documents to Keep for Life: there are some documents you just can’t throw away. These include marriage Licenses, divorce decrees, wills, trusts, estate planning documents and death certificates. Suze Orman also suggests you keep a permanent record of all major loans you have paid off such as homes, cars and so on.

Tips for going Paperless

Of course, if you hate paper as much as I do, you can easily take care of almost all your financial to do’s online. If you’re worried about cyber-safety just make sure you are logged onto a secure network. That means no bill paying at wi-fi hotspots. Check out your banks website for automatic bill paying, accounts alerts and more. This should all be free, if it’s not, switch banks. You can also go online to check out things such as Social Security benefits. Toss all those green and white sheets once you have verified the current one is up to date. Go to and click on estimate your retirement benefits.
The most important thing to remember is to edit your files on a regular basis. If you really need to dig out from your piles of paper, take it a little bit each night, sit in a comfortable chair and sort. I think you’ll be surprised at how little you need.

Wishing you all skinny file folders….

This entry was posted on Tuesday, February 8th, 2011 at 8:00 am and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. Comments are currently closed, but you can trackback from your own site.

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