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MMI offers tips for financial Spring cleaning

Posted on March 23, 2012

Spring has officially arrived, which means it’s time to clean house! According to a recent study offered by American Cleaning Institute, 74 percent of Americans believe in the spring cleaning tradition. The #1 motivation for spring cleaning is to maintain a pleasant appearance (71 Percent). Spring cleaning offers many more benefits, and not just for your living space. A clean and well-organized financial house provides a clear financial path for reaching your financial goals.

“Before you toss your financial file cabinet out with the other household clutter, you should know that some things are worth keeping,” advises Jo Kerstetter, vice president of financial education for Money Management International. “The key is to know which items to keep and which to toss.”

Keep tax returns for six years. The IRS can audit your return for only three years after filling, but they can challenge your return for up to six years if they suspect under reporting of income by more than 25 percent.

Keep investment records for seven years. Annual real estate statements and other records of investments may come in handy for tax purposes. Toss monthly statements, but keep annual correspondence for seven years post sell.

Keep W2s and tax statements until you retire. Income statements and other documentation is the best proof of earnings for social security benefits.

Toss paycheck stubs after bank deposit. In some cases a paycheck stub may be helpful in addressing errors concerning income reported on W2s, but a record of direct deposit can serve the same purpose.

Toss insurance paperwork after expiration. Liability policies with "occurrence" coverage are the only policies that should be retained after expiration. This type of liability protection covers you for damages occurred while the policy was in effect — even if the claim happens after coverage expires.

Toss credit card receipts after monthly statement review. Additionally, credit card monthly statements should be destroyed annually.

Finally, before taking out the trash, be sure that all personal identifying information has been destroyed to avoid any threat of identity theft. To keep your most valuable documents safe, consider opening a safety-deposit box at your local bank or credit union.

For more tips on maintain a clean and well-organized financial house, consider one of our free financial education webinars available on MoneyManagement.org.

 

About Money Management International
Money Management International (MMI) is a nonprofit, full-service credit-counseling agency, providing confidential financial guidance, financial education, counseling and debt management assistance to consumers since 1958. MMI helps consumers trim their expenses, develop a spending plan and repay debts. Counseling is available by appointment in branch offices and 24/7 by telephone and Internet. To learn more, visit MoneyManagement.org or call 800.432.7310.