Quarterly Newsletter

When you put a piece of paper in the trash, it can be difficult know what happens to it. Since few people burn trash anymore, it is likely that your trash passes through several stages on its way to a landfill or incinerator. Every step that occurs once the trash leaves your control has risk that someone will find personal information they can use to cause you harm. Personal account statements can be used to transfer money from your account to someone else. Credit card statements and password documents if not shredded can be used to make unauthorized purchases. Photographs and old ID cards might be used to make fake IDs.

One way to safeguard personal information is to shred it before it goes into the trash. If you don't have a personal shredder, you may want to consider buying one from a local office supply store or using a shredding service. For your safety and privacy, consider shredding these documents before throwing away:

Tax information and returns - There is a general three year statute of limitation for your taxes. This means the IRS has three years from when you file your return to start an audit. (There is no limit for fraudulent returns). Therefore, you need to keep documents that support items on your tax returns for those three years. Each year you can throw out the three year old documents, but you should keep copies of tax returns forever.

Investment records and statements - Investment records must be kept to support your tax returns. Documentation of purchases and sales (either confirmations or brokerage statements including the information) must be kept for three years past when you report the sale on your tax return. You may find it helpful to keep brokerage statements for many years.

Bank statements and canceled checks - You should keep canceled checks that support any tax deductions and any that you think may come in handy. You may want to keep bank statements for some period (three years or so) so you can document your payments for important items.

Paycheck stubs - These documents can include very important information including Social Security number and financial institution account numbers if you use direct deposit. Unless you are planning to apply for a loan, you should only keep the latest stub.

ATM receipts - Keep ATM receipts until you have compared them with your bank statement.

Credit card statements - There is no requirement to keep these statements. You may want to save them for some period (year) in case there is a dispute or if you want to return an item.

Credit card receipts - Generally keep receipts until you have compared them to your credit card statement. However, if the receipt is for something that you may want to return, keep it longer.

Utility bills and other household receipts - Unless you are claiming household expenses as tax deductions, there is no need to keep these types of records very long. You can always use a canceled check to document payment.

Warranties - Keep warranties for as long as you own the item or until the warranty period expires.

Insurance - Insurance policies and claims information should be kept for as long as the policy remains in effect.

Home financial information - Deeds, mortgages and information on home improvements should be kept for as long as you own the home plus the three year period for tax purposes.

What records should you keep permanently? Documents to keep forever include wills, powers of attorney, birth certificates, marriage documents, divorce or child care orders, trust documents, business agreements, military records and other such permanent records.

What about electronic data files with personal information? Floppy diskettes and CDs should be shredded, destroyed or made unusable in some manner. Computer hard drives deserve special attention. Hard drives may have information on finances, taxes, user names, passwords and other information that should not fall into the hands of fraudsters. Deleting files and formatting a hard drive does not permanently remove the files from the system. Before disposing, recycling or donating a PC, the hard drive should be removed and physically destroyed.