There are those that throw away everything and those that keep everything. I keep everything. My file cabinet long ago gave up accepting any more paper. My attic is now complaining. So I figured that now that I'd gotten my life under control by enrolling in a debt consolidation program, it was about time I did something to sort through the piles of paper. Although throwing out everything instead of going through all those documents looked tempting at that moment, I decided to research the subject of how long to keep documents. This is what I came up with.
Everything I saved was important but not for nearly as long as I figured. I was right about one thing, keep anything that has to do with taxes. But again, not as long as I thought. Tax records such as cancelled checks or other records that can prove any claim you made for charity etc. on a tax filing should be kept for seven years. The IRS apparently has six years to question your return.
The documents that should never see a file cabinet are bank deposits and withdrawals (including ATM transactions), and credit card receipts. Keep them only until you verify them on your statement. Bank and credit card statements can be thrown away after a year if you are not using them as proof for a tax filing. If you don't get your cancelled checks back this may be the only proof you have of a tax deduction. Keep the statement with the tax related charge for seven years. Keep loan agreements until the loan is paid off and you receive a notice that the loan is paid in full. Save that notice forever. Other "forevers" are any documents, canceled checks, or receipts that have to do with purchasing, selling, or renovating of a house. If you made non-deductible contributions to an Individual Retirement Account, forever save those records too.
Finally we get to credit card contracts. Keep them as long as you have an open account. However, that original contract probably has long since been replaced by an even finer print document tucked into one of your statements. Read everything that comes in fine print, the rules have probably changed. Because I was enrolled in the debt consolidation program, I thought, at first, that the stacks of credit card contracts were no longer important. When I asked my debt consolidation counselor, though, she told me that these should be saved as long as I was enrolled because the credit card debts were not fully paid off until all my payments to the debt consolidation company were complete.
With this new found knowledge, now all I have to do is buy a shredder to protect my personal identity and roll out the recycling buckets. This is going to be fun. I wonder what I will do with all the space.
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