Saturday, March 20, 2010

My Filing System-Part Two

I am such a dork. I just realized that when I was doing my posts on filing I wrote 2 posts explaining the 2 year catch all folders and never even commented on my permanent and remove/replace filing system. So I’m just going to go back and write the other post I meant to write now.

I keep my taxes for 10 years now. I really liked the rotating system proposed by the Freedom Filer. Basically you set up 10 file folders and label them Tax Year 1, Tax Year 2…Tax Year 0. The number represents the last digit of the year the tax return was filed in. For example, my 2009 tax returns are filed in Tax Year 9. When 2019 taxes are completed I will shred my 2009 tax returns and put the 2019 tax returns in Tax Year 9.

I also used the Freedom Filer suggestion of a remove/replace section of files. These are documents that are frequently updated, renewed or replaced. Things like insurance policies, service provider contracts and retirement statements. When a new document comes in the mail, I take out the old one, tuck the new one in its place and shred the old one. It’s very simple and that way I never have to go through and purge out years of files.

My last section is for my permanent files. These were a challenge to me. Have you ever read a book that tells you how to file? Almost all of them start with “Decide on the categories you will need for your filing system”. Seriously? That is why I am reading this book. I don’t know where to start. Tell me what I need to keep and what I can throw away. What are the basic categories I will need to organize my paperwork? And how do I file it? Is car insurance filed under “car” or “insurance” or “the name of my insurance company”?

This was the list I found that seemed to make sense to me.

1. Tax Returns-Include 8 folders for the last seven years plus the current year. Place all W2’s, 1099’s, interest statements and returns in this file.
2. Retirement Accounts-Create a folder for each retirement account you have, 401(k)’s, IRA’s, etc and include the statements.
3. Social Security-Include your social security benefits statement.
4. Investment Accounts-Create folders for each brokerage account, mutual funds, or individual stocks and keep the statements here.
5. Savings and Checking Accounts-Add files for each separate account you have.
6. Household Accounts-Here you will keep track of your House title, home improvement receipts, mortgage and utility statements.
7. Credit Card Debt-Add a folder for each card you hold.
8. Other Liabilities-This folder would include student loans, personal loans, car loans, etc.
9. Insurance-This folder contains all insurance policies, home, life, car, health, disability, long-term care.
10. Will or Trust-Keep a copy of your will and living trust here.
11. Children’s Accounts-Include any college savings plans or trusts set up in your child’s name.

I tweaked it a little bit, but this is what I used as a jumping off point. My car insurance is now filed in a folder marked “insurance-car”. I keep my taxes for 10 years instead of 8. I made medical files for each of us and a folder for our pets. But this is working pretty well so far. I know where to find things. It makes sense to me. It’s not so complicated that I can’t use it.

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