RISMEDIA, April 14, 2010—Some 89% of Americans said they were at least fairly well organized or better when it comes to their important financial documents, but nearly one-quarter had either lost or forgotten about critical paperwork, according to a nationally representative poll by the Consumer Reports National Research Center.
Worse, 16% had lost money or incurred a charge because of the poor organization of their paperwork. The survey also revealed that 40% of Americans think they can find a document at a moment’s notice, and 49% can do so with little looking.
Married and domestic couples agree as to which sex is more organized: 58% of the women surveyed said they had a better idea of where their most important documents were than their spouses did; only 30% of the married men thought they had a better idea.
But some of the respondents may not know as much about their partner as they think – 5% admitted they had hidden accounts from a spouse or significant other.
“Good record keeping is essential and makes regular events like tax time or unexpected emergencies like the passing of a loved one go smoother. If you’re disorganized about your paperwork, you can lose a significant amount of money on late fees and interest charges,” said Mandy Walker, sr. project editor, Consumer Reports Money Advisor (CRMA).
Consumer Reports Money Adviser’s experts say that to help avoid identity theft, people should shred anything they plan to throw away that contains personal data. More than 50% of the people surveyed said they put documents through a shredder, 26% tear them up, 15% claim to burn them, and 5% admit to doing nothing before they trash them. Consumer Reports recommends consumers look for a crosscut shredder rather than a strip one, which leaves long paper bands that can be reassembled.
Tax season is the perfect time to start tackling the paper piles. The act of filing (or gathering your information for a tax preparer) forces you to become reacquainted with your finances. You can divide nearly all of your financial records into four categories: papers that you need to keep for the calendar year or less; ones that can be destroyed when you no longer own the items they cover; tax records, which you should save for seven years; and papers to keep indefinitely.
What to keep for 1 year or less:
CRMA’s experts advise people to set up a place to keep bills until they’re paid. As soon as a bill comes in, put it in a folder labeled “bills to pay.” Then set an electronic calendar reminder when you’re going to pay them. Documents that you have no long-term need to keep include:
Bank records. Keep deposit and ATM receipts until you reconcile them with your monthly statements.
Credit card bills. You don’t need to keep them after you’ve paid them unless they support a deduction you’ll be taking on your taxes, such as for a charitable donation (in which case you should file the bill with your current-year tax records). If an item you’ve charged is under warranty, keep the bill until the warranty expires.
Investment statements. You can shred your monthly and quarterly statements from brokerage, 401k, IRA, Keogh, and other investment accounts as new ones arrive. But hold on to annual statements until you sell the investments.
What to keep for a longer period:
Documents relating to investment purchases, loans, and other items that expire can be stored in an out-of the way file cabinet. But try to go through them once a year and toss out papers below including:
Household furnishings paperwork. Keep receipts, warranties, and instruction booklets for major appliances and electronics.
Loan documents. Keep closing documents for mortgage, vehicle, student, and other loans in a safe-deposit box. You can get rid of them after the loan is paid off.
Savings bonds. Hold these in a secure place until you cash them in. Or you can convert them to electronic form using the Treasury’s SmartExchange program.
What to never toss:
Hold on to essential records such as birth or death certificates, marriage licenses, and divorce decrees. Social Security cards and military discharge papers should be kept in a safe-deposit box. Other documents to hold on to forever:
Defined-benefit pension documents. Keep pension-plan documents from your current and former employers. Store them in your file cabinet.
Estate planning documents. Keep copies of wills, trusts, and powers of attorney in your safe-deposit box. You should also make sure your attorney and your executor have copies.
Life insurance policies. For permanent life insurance- policies that have a cash value or investment component- keep documents and a list of the companies that issued them and their phone numbers in your safe-deposit box.
For more information, visit www.consumerreports.org.