Performing the heavy task of culling a deceased family member’s documents made me realize I needed a simple paperwork retention system.  An easy way to decide what to keep or toss.  My two-drawer filing cabinet had overflowed to a second.  Both tightly packed.  Plus, it is so very frustrating to waste time with a paper search.  Knowing you’ve got it but just can’t find it.  While many records are stored digitally, there are four areas which can be problematic paper accumulators – legal, medical, taxes and mementos.  Recall The Money Skinny™ mission is to save you time and money.   Let’s review paperwork retention through these four lenses to prune the volume of paper.

Paperwork Retention – Legal

The legal category is paperwork for contracts, real estate transactions and medical bills.  Every purchase and sale of real estate generates volumes of legal documents.  It may be interesting to review the purchase and sale price of a house transaction three decades ago.  But radon test results?  How about homeowners’ association thou-shalt-not rules for a former dwelling?  To simplify, keep only a summary page for a closed real estate transaction.  Changing that paperwork from the legal to the memento category.

Paperwork Retention – Medical

The Money Skinny™ recommends keeping medical paperwork for three years.  A collections agency splashed a two-year-old $50 medical bill onto my credit report.  Seriously?  I’d never received it due to an incorrect address.  Regardless, still my responsibility to pay it.  That scorch taught me to treat medical bills like tax records.  Difficult to untangle and time consuming to correct.  A paper trail makes issues easier to resolve.

Paperwork Retention – Taxes

Tax-related paperwork is a little more thorny.  The IRS recommends tax paperwork be kept for three years from the date a tax return is filed.  Seven years when a loss from a worthless security occurs.  Specific IRS guidelines are available at How long should I keep records?

Long ago circumstances can make the current tax situation murky.  For example, determining the cost basis of a stock or the gain on a real estate sale.  The Money Skinny™ recommends reviewing bank and credit card statements for tax-related circumstances before a massive paperwork shred.  Take-out that was put on a credit card last year?  Who cares.  Contractor payments for a room addition on your primary residence?  Keep.  One way to streamline recordkeeping is to use one credit card or bank account for tax-related expenses like home improvement, 529 College Savings Plan expenses, etc.  Use a different credit card for miscellaneous everyday expenses.

Paperwork Retention – Mementos

The memento category is difficult.  For me, mementos includes a picture id from my first adult job and hospital bills for the births of my children.  The eager, ready-to-set-the-world-on-fire id is understandable but why the hospital bills?  My mother found the hospital bill for my brother’s birth decades earlier.  The cost was about two hundred dollars for a ten-day maternity stay.  It was an interesting glimpse into a pre-health insurance world.  Hard to fathom what went on during that ten days.  Some mementos are like a time capsule.   Once the memento category has been culled to only that which is truly meaningful, it can be filed or scanned and pitched.  Your choice.  No-way/no-how am I getting rid of those baby footprints when Junior is now kicking it in size 13.

Resolving Actual Mementos

What about actual mementos?  Reserve for last review according to author Marie Kondo in The Life Changing Magic of Tidying Up.  Her advice is to take a digital picture of items with resale value.  Thank them for their service.  Then say good-bye.  Sell them on Craigslist using Craigslist Selling in 5 Easy Steps.  Re-home bulk with 5 Tips for a Successful Garage Sale.

Paperwork Retention – Shredding

Confidential document shredding is available through the Staples Business Center.  Some cities offer a free annual shredding service as part of a recycling program.

• Paperwork retention can be divided into legal, medical, taxes and mementos.
• Review bank and credit card statements for tax-related circumstances before a massive paperwork shred.
• Streamline recordkeeping by using one credit card or bank account for tax-related expenses.  Use a different credit card for miscellaneous everyday expenses.
• Some cities offer a free annual shredding service as part of a recycling program.