A lot of people are starting to take their finances paperless. If you plan on eliminating the documents you have accumulated over the years it is important to make sure you dispose of them properly. It’s likely you have a ton of paper. The best option is to go to call a local shredding place like Shred-It. Ask them if they have any community shredding days coming up. They often do these once a month on a Saturday and they only charge a minimal amount to shred your docs.

Of course you can scan all the documents you plan to shred as a backup but it is likely you have a lot of documents you no longer need. Save yourself scanning time by eliminating some of these documents. There are certain items, however, you should make sure to keep. For example, always have the following investment and tax related statements:

• Cost basis information
• Brokerage statements
• All tax records and returns, especially…
  • 5498’s Forms
  • 1099r Forms
  • 8606 Forms

Another question often comes up about how long to keep documents. If you go to digital copies for all your docs then there is not reason to not keep them forever. For paper statements you should keep all tax documents for 7 years. Technically, the IRS has 3 years to bring an audit. Personally, I would recommend always hang on to all of your tax documents.

Other Tips

• Buy a small shredder to shred your unwanted mail
• Opt out of those pesky convenience check mailings credit card companies send
• Opt out of magazines and other things you don’t read
• Stop “pre-approved” credit card mailings by going to OptOutPrescreen.com
• Sign up for paperless options of all your bills and statements (some brokerage and banks are starting to charge if you choose to receive paper statements)
• Learn to use online bill pay

Geeky Stuff

Personally, I love scanning and making every document searchable. I scan everything using OCR so I can search “inside” every document without opening it. f you really want to geek out on going paperless then I suggest the book Paperless. It is primarily geared toward people who have a Mac but many of the ideas can be replicated on a PC.

Matthew B. Brock, CFP® Senior Partner, Owner

Divergent Planning, LLC
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Financial Advisors do not provide specific tax/legal advice and this information should not be considered as such.  You should always consult your tax/legal advisor regarding your own specific tax/legal situation.  

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