How to Organize Paperwork

We’d all like to think that we’re at or near going paperless (and perhaps a few of us are). However, the truth is that most of us still receive enough snail mail to make it a pain to take care of and organize.

Having huge piles of documents laying around can only leave one feeling unorganized and a little stressed. An afternoon worth of work can set you up permanently with a system to relieve that cluttered feeling. It took me a few years to develop an effective system worth sharing. Here it is:

From the Mailbox to what?

When you break it down, all paper mail can be divided into four categories. This stage is often the toughest part of the process because it requires you to make a decision about the value of the piece of paper in your hand. Here are the four categories:

1. Recycle: This is typically junk mail or mail that does not have anything you wouldn’t want someone else to know about you on it. I place all of this mail into a brown paper grocery bag and then it goes out to the curb every Wednesday for pickup.

2. Shred, then Recycle: This is mail and documents that have some sort of personal identifiers on it that could potentially lead to some sort of identity theft if stolen. If you do not have a paper shredder, it is a MUST HAVE. Here’s a good paper shredder that cross shreds, and even shreds plastic cards. Once your shredder is full, just toss the confetti into the recyclable paper bag.

3. Take Action: For the following two categories I keep a brown manila folder on my coffee table with labels on them. The first is labeled ‘take action’. Non-ironically, this means the paper has some sort of action I must take on it. Perhaps it’s a bill that must be paid, a questionnaire I need to return, or something else.

This folder can even serve as a reminder for mail that you need to initiate, versus reactively reply to. You can simply write yourself a note or put a blank envelope within the folder so that the next time you clear your folder out, you can take the action. It’s usually good to clear a folder out once a week.

4. File: This is all of the stuff that you don’t need to take action on that you think is good to keep around. It can include medical documents, paystubs, tax documents, investment statements, etc (see below). The trick here is to keep only the stuff you need to keep because you will quickly find your files to be overrun.

How to File Documents Effectively

All of your ‘file’ documents will need a home. For this I have a two-drawer file cabinet with labeled hanging files. The types of files are broken into ‘parent categories’, and ’subcategories’ by theme. Here are the parent categories (each with a large hanging folder), and the subs I have within them, which each have their own non-hanging folder:

• Work: payroll statements, expense check receipts
• Home: home insurance, property tax assessments, mortgage paperwork, mortgage statements, home improvement projects
• Medical: dental, medical, health insurance, life insurance
• Retirement: 401K statements, Social Security statements
• Investing: One folder for each brokerage account that I own, bank statements, company stock options
• Auto: title, insurance, maintenance records (I prefer to keep in my car)
• Tax: tax documents, all docs from previous tax year, all docs from two tax years ago, all deductible receipts
• Bills: phone, internet, cable, gas, electric, water, credit card(s)
• Misc: anything else you feel is worth keeping

What Happens when My Filers Get too Full?

I have three steps to deal with this issue and reduce the clutter in my filing cabinet:

1. When I receive a new document to be filed, I place it in the back of its contain folder so that everything is organized by date, with the oldest docs first.

2. Once a year, I go through the cabinet and shred things I most likely will no longer need.

3. Keep the good stuff. I like to keep a year’s (at least) for just about everything. Some things like tax related docs I go back at least 2 years on. Other things, you just never get rid of – you probably know which docs these are.

Final Thoughts on Organizing your Paper Clutter

If you are able, try to eliminate is much paperwork as you can by opting for emailed statements. A little work and organization can definitely lift a huge weight off your shoulders, tidy up your living space, and make things easier to find. You may also find that you are much more on top of things and don’t miss taking actions when needed.

• Do you have a paper organization system in place?
• What works for you?
• Are you near paperless?

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