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When Simplifying, Which Papers to Keep and Which to Toss?

Downsizing to a smaller home often makes it necessary to rethink your paper stash — especially when you are shifting from a large home office to a workspace the size of a cubbyhole. Sorting paper can be time consuming, so it can help to have some guidelines as you declutter. Here are some tips for dealing with nine specific categories of paper, as well as ground rules on what you should keep and what you should shred or recycle before you move.

Paper You Should Keep

When deciding what papers to keep as you downsize to a smaller home, it’s wise to consider which records would be difficult or costly to re-create down the road. Those items can go at the top of your must-keep list.

1. Car and Bike Records

It’s best to keep car loan documents until the loan is fully paid off and to keep title documents for the cars you currently own, Consumer Reports advises. You also would be wise to save purchase receipts for bikes. Be sure to file all repair and service records. You will want to show these to a potential buyer when you sell your car or bike so that the buyer can be confident that your vehicle was properly serviced and that both your vehicle and bicycle come with an uncomplicated ownership history.
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2. Official Records

Some documents can be more difficult to replace, such as birth and death certificates, adoption papers, marriage licenses, divorce decrees, estate plans, Social Security cards, passports, records of paid mortgages and military discharge papers. Only 17 states currently allow you to obtain a new Social Security card online, according to the Social Security Administration. The majority of states require you make a trip to the Social Security office and bring several official documents that prove your identity. I’m guessing that you, like me, can think of a more enjoyable way to spend your day.

I recommend keeping these documents in either a bank safe deposit box or in a fire-safe box in your home. That way you can easily put your hands on these important records when you need them.

Paper You Can Toss

The good news is that you can get rid of many paper records that formerly were necessary to hang on to — at least before the dawn of the electronic age. For those who would still prefer to keep some hard copies, you can nonetheless whittle your stashes of papers in the below categories by quite a lot.

3. Bank, Mortgage, Investment, Insurance and Retirement Account Statements

To avoid excess paper in the future, you might consider signing up to receive statements electronically. Records typically can also be accessed on a bank or investment firm’s website. My bank makes records available at no charge for 10 years; you’ll want to check with your bank for its policy.

Do be sure to keep a hard copy of your account number, customer service phone number, user ID and password. To avoid identity theft, never save this information on your computer’s hard disk or in email. Instead, consider using an external memory source such as an external hard drive or a USB drive. Another option is to place this information, whether in a paper printout or an electronic storage device, in a home safe.

If you are not comfortable going paperless, I recommend that you keep your year-end statements but shred your monthly and quarterly statements. One caveat: If you have investments in stocks, bonds or mutual funds purchased before 2013, you may want to keep purchase confirmations until you sell the investment so you can establish your cost basis and holding period for tax purposes. Government regulations require investment firms to keep track of your cost basis after 2013 for many types of investments. However, I recommend you double-check the rules with the Internal Revenue Service or Financial Industry Regulatory Authority, as well as with your investment firm, as the regulations have rolled out over time and may not cover all of your portfolio. In addition, before you shred any documents, check with your retirement investment firm to make sure they have a record of pretax versus after-tax contributions. You will need this information when you retire.

4. Credit Card Statements and Utility Bills

If you are comfortable with electronic records, there is no need to keep credit card statements and utility bills after you have paid them — unless you need the paper copies for tax purposes. Consider signing up for paperless delivery of future bills, as well as having bills paid automatically from your checking account. You’ll want to keep a record (again, either paper, external hard drive or portable disk drive) of the account number, customer service phone number and website login information in a secure place, such as a safe. If you are not comfortable going paperless, you only need to keep credit card and utility bills necessary for tax deduction documentation. I recommend you store these with your tax returns.

5. Appliance Manuals

Feel free to recycle appliance manuals when the new appliance arrives. Most appliances have a sticker inside the door with the model number listed on it, and care and use instructions and troubleshooting guides usually can be found on the manufacturer’s website. Many people do file their appliance manuals, but many also never look at them again. I have known people to rediscover their manual after the actual appliance has been replaced — often years before! It’s wise to save warranty information until the product warranty has expired. If you do prefer to keep a hard copy, one good way to cut down on the paperwork is to save manuals only for major appliances. Consider storing all manuals in one file so you can find them easily.

6. Miscellaneous Paper

It is easy to have pieces of paper lying around that don’t fit into any real category, and many people struggle with what to do with jury duty records, frequent flier numbers and other miscellaneous information. If you feel comfortable going paperless, you can store these records in a note-taking app or start a “miscellaneous” file on a Google Doc or hard disk. After doing so, you can feel free to recycle the paper.

While the other two categories are pretty clear-cut cases of toss or keep, the handling of other records will depend on your own personal circumstances.

7. Personal Tax Returns

According to the IRS, in most cases, personal tax returns should be saved for three years. However, special circumstances might require you to save your returns for up to seven years. Check or talk to a tax professional for specific examples that might apply to you. Given the clear guidelines, you can feel confident about getting rid of any tax returns and supporting documents that are older than three to seven years. (The relevant time period will depend on your tax circumstances.) And by all means, shred these items when it’s time to let them go.

8. Medical Records

Medical records are very important, but that does not mean you have to keep every single piece of paper related to your health. Explanation of benefits and claims information can typically be found on your insurance website. To avoid incoming mail pileup, consider signing up for paperless delivery if you haven’t already done so. Even if you are uncomfortable going paperless, you can shred old medical bills, records and statements once they have been paid and all billing disputes have been settled.

However, you’ll want to save notes and records for medical situations that have not been resolved. Consider scanning these records onto your hard disk to cut down on paper storage. You may also want to keep X-rays and MRIs from a former injury or illness for future reference and comparison.

9. Pet Records

It is personal preference as to whether you keep your pet’s immunization and other records or trust your veterinarian to do so for you. One option to eliminate paper is to scan records into your computer. You can simply recycle the hard copies of this information after you scan.