Martha Stewart: Don’t get yourself buried in paper

Having a place for everything isn’t just about aesthetics. Being disorganized, especially with bills, can create extra work and subject you to late fees.

Centralizing

Create a command center. Ideally, this area — a desk or another dedicated workspace — should encompass an ample surface, a computer, in-boxes for unpaid bills, files for long-term storage, a paper shredder and office supplies.

Other essentials include a comfortable chair and an appealing setting, because if you don’t want to sit there, chances are you won’t want to work there.

Navigating bills

There are two phases of dealing with bills: paying and storing. The most straightforward approach is to label two in-boxes with the dates of upcoming paychecks. As soon as you open a bill, put it in the appropriate box.

To keep track of bills after they’ve been paid, store them in file boxes or accordion file folders, organized by month rather than by type of bill.

Reducing receipts

Think about which receipts you really need to keep. If you find you always eventually toss receipts for everyday items that aren’t tax-deductible such as groceries, get in the habit of throwing them away immediately.

Save the ones you need to hold on to — for items you may want to return, appliances, medical expenses and home improvements — in a separate accordion file, also organized by month. Washington state residents can deduct sales tax, which provides another reason to hold on to those receipts.

To minimize paper clutter, scan your receipts and save them digitally. See “Going paperless,” below.

Saving selectively

The beauty of a 12-month filing system is that at the end of the year, you can simply mark the year on the file and place it on a shelf.

Some documents should be stored separately and indefinitely. These include medical bills and claims, tax returns, investment records (such as year-end statements for retirement accounts), anything pertaining to property and valuables (including mortgage contracts and assessments), and legal documents (such as wills and those pertaining to estate planning).

Make copies of these and other irreplaceable documents, including deeds, titles, stock and bond certificates and certificates of deposit, and store the originals in a fire-resistant safe or a safe-deposit box.

Maintaining order

After you set up your new approach, dedicate some time to its upkeep every week. Aside from proper and frequent filing, perhaps the most important ongoing chore is purging unnecessary and obsolete paperwork. See “Document-Retention Guidelines” below.

A good way to manage what comes into your home is to open your mail near a shredder or a recycling bin.

Going paperless

If you have a scanner, you can turn paper documents into digital files. Even an inexpensive one can achieve a resolution that’s good enough.

Set up an external hard drive to synchronize with your computer often and back up your documents regularly. Look for one that has twice the capacity of your computer.

Transfer files (at least a year old) to compact discs.

Saving documents

If you have the space, err on the side of caution. Keep insurance policies, warranties and contracts until they’re no longer active.

Hold on to auto records for as long as you own or lease your car. After the vehicle is sold or traded in, retain the sales-transaction data for six years.

Most bills and receipts can be shredded after you receive a canceled check or a credit card statement.

Paycheck stubs and quarterly investment records should be stored for one year. Seven years is the rule for retaining credit card and bank statements. Never toss receipts and documentation for tax-deductible items, tax returns, house-related records, most IRA contributions and annual investment statements.

Write to Ask Martha, Letters Department, Martha Stewart Living, 601 W. 26th St., Ninth floor, New York, NY 10001. E-mail mslletters@marthastewart.com.

&Copy; 2010 Martha Stewart Living Omnimedia, Inc.