Author: Jodee Brydges

Next week we will review 5 money leaks (one per day) to help plug small spending leaks. During a time of financial uncertainty, small savings can add up to help weather the storm.

Financial clutter can create roadblocks on your path which can lead to costly late fees if payments are missed, exposure to identity theft if personal information is not filed away and missed savings opportunities when filing taxes. Below is a list of what to keep, how long to keep it, and what to shred:

• Keep sales receipts until the product warranty expires or until the return/exchange period expires. (If you need sales receipts for tax purposes, keep them for three years). 
• Keep ATM printouts for one month, or until you balance your checkbook. Then they may be thrown away. 
• Keep paycheck stubs until you have compared them to your W2s and annual social security statement (usually one year). 
• Keep paid utility bills for one year unless you’re using them for tax purposes (deductions for a home office, etc.). In that case you need to keep them for three years. 
• Keep cancelled checks for one year unless you’re using them for tax purposes. In that case you’ll need to keep them for three years. 
• Keep credit card receipts for one year unless you’re using them for tax purposes. In that case you’ll need to keep them for three years. 
• Keep bank statements for one year unless you’re using them for tax purposes. In that case you’ll need to keep them for three years. Keep quarterly investment statements until you receive your annual statement (usually one year). 
• Keep income tax returns for at least three years (six if you have multiple sources of income). 
• Keep paid medical bills and cancelled insurance policies for three years. 
• Keep records of selling a house for three years as documentation for Capital Gains Tax. 
• Keep records of selling stock for three years as documentation for Capital Gains Tax. Keep annual investment statements for three years after you sell your investment. 
• Keep records of satisfied loans for seven years. 
• Keep contracts as long as they remain active. 
• Keep insurance documents as long as they remain active. 
• Keep stock certificates as long as they remain active. 
• Keep property records as long as they remain active. 
• Keep stock records as long as they remain active. 
• Keep records of pension and retirement plans as long as they remain active. 
• Keep marriage licenses forever. 
• Keep birth certificates forever. 
• Keep wills forever. 
• Keep adoption papers forever. 
• Keep death certificates forever. 
• Keep records of paid mortgages forever. 

Source: Moneymanagement.org

Separate the documents into two piles, keep and shred. Create folders for the “”keep” documents and file away. If you do not have a cross shredder, I highly recommend purchasing one. Take the time to shred documents that are no longer needed. Shredding personal documents not only clears financial clutter it also protects you from costly identity theft. 

Whether you create a paper filing system or an electronic filing system, make a folder for each household bill, credit card / student loan statement, insurance policy, and all legal documents. Below is a list to help get all of your documents organized:

Household: -Mortgage / Lease -Utilites (cable, water, gas, electric, garbage, etc.) -Property tax records -Insurance -Cellular phone -Auto loan

Insurance: -Home / Renters -Auto -Life -Medical

Financial / Credit: -Bank Statements -Investment Account Statements -Retirement Statements -Student Loan Statements

Legal / Personal: -Trust / Will / Power of Attorney -Birth Certificate -Social Security

Tax Records: -Paystubs, W-2 Forms -Tax Returns -Receipts for tax deductions

Having an organized filing system allows you to easily access documents when needed (e.g., filing taxes, applying for a mortgage), fix budget leaks, and stay on track with your financial goals going forward.

Happy Filing!

As mentioned yesterday, with the current “Shelter in Place”, tracking your daily expenses in April may not provide a full picture of how and what you spend your money on. Today’s exercise is to pull out or download February bank statements and credit cards statements. Then use the statements to break each expense, note the monthly amount for each expense, and total. Here is a format to guide you:

EXPENSE	MONTHLY AMOUNT
Mortgage / Rent	$
Utilites	$
Dining Out	$
Movies	$
TOTAL	$

Additionally, someone asked if I could elaborate on the list of expenses. Of course! Below are two lists to use:

First, breakdown all of your fixed expenses. These are the essential items that are paid monthly: Mortgage / rent, insurance, auto loan payments, credit card payments, utilities, water, garbage, cable, cell phone bill, groceries.

Next, breakdown all of your optional expenses. These are the “wants”: morning latte, lunch, dining out, Door Dash, manicures, pedicures, hair cuts / color, gym memberships, movies, sporting events, new clothes, subscriptions (wine clubs, magazines, etc), dry cleaning, housecleaner, apps for a phone, kids apps (e.g., Roblox Robux, Fornite, etc), Peleton membership.

Everyone’s categories will vary, the above serves as a guide to help you identify your individual categories. This excercise will take approximately 30 – 45 minutes. All you need is a notebook, a pen and your statements (and maybe a cup of coffee).

Happy Tracking!

Tracking daily expenses for 30 days is critical to understanding where your hard-earned money is being spent and recognize spending patterns. At a time when economic uncertainty is even higher than it was in 2008, this 30-day exercise will help people of all income levels reduce expenses. 

NOTE: Given the “Shelter in Place” April’s expenses may be lower than regular months (for example: gas, dining out, activities, etc.). Stay tuned for tomorrow’s tip which will allow you to compare April to a normal month and paint a realistic spending picture.

Feel free to share with your family, friends and employees/coworkers. Millions are facing financial hardship.