Family Finances


Declutter Your Life

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If your home is starting to feel like the “before” scene from an episode of Hoarders, it’s time to declutter. Think about what you’ll gain by getting rid of stuff you no longer need, want or love: more space, and less stress about the mess or about how much money you’ve spent on impulse purchases. Decluttering will make moving or downsizing easier. You’ll rediscover what you already own so you don’t waste money buying duplicates, and if you’re really ambitious, you may even be able to clean out a storage unit and eliminate the monthly fee. You can make money by reselling your stuff, or do good by recycling or donating it (and maybe take a tax deduction). But first you need to decide what to throw away.

SEE ALSO: Declutter Your Portfolio

Toss

Whether it’s piles of old receipts, cans of paint that no longer match your walls or your first two cell phones, some things just have to go. If you don’t have a use for it now, you likely never will.

Paper. It can be the toughest beast to slay, but once you’re done, you can create a system to make sure it doesn’t rear its ugly head again. Nanette Duffey, a professional organizer and the owner of Organized Instincts, in Atlanta, tells her clients to gather all their papers in one place and sort them into three piles: action, keep and toss. Bills to pay, wedding invitations to answer and permission slips to return to your kid’s school all go in the action pile.

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Tackle this pile first, and knock out whatever you can right away. Next, create a space in your home for new paper -- a basket by the door for mail and bills to be sorted ensures that incoming paper has a place to land -- and commit to cleaning it out once a week. File (or toss) papers as soon as you’ve taken action to keep a multitude of piles from accumulating.

Most financial documents can be tossed after three years. The one exception is tax returns, which you should keep for life. You can ditch the supporting documents after three years (six if you’re self-employed). Hold on to year-end investment statements and documents showing your purchase price for stocks and mutual funds so that you can calculate the cost basis when you sell (see How to Figure Your Cost Basis if You Sold Stock). Also keep home-purchase and home-improvement documents. Most people no longer need to pay taxes on their profits on a home sale, but if you live in the house for less than two of the five years leading up to the sale, your gains may be taxable. In that case, your home-improvement records can substantiate an increase in your tax basis, and a lower gain, if you’re audited.

Keep other financial documents for a year. You can permanently cut down on the paper pile-up by signing up for paperless billing. Utility, credit card and loan statements should be available online for at least a year, and you can save a PDF copy on your computer. Back up your files to a cloud service such as Windows SkyDrive (7 gigabytes free; $10 a year for 20GB) or Apple iCloud (5GB free; $20 a year for 10GB). Want everything in one place without lifting a finger? Manilla.com links to each of your accounts, stores statements and sends you payment reminders—and it’s free.

When it comes time to toss, invest in a quality shredder. Look for a cross-cut model -- such as the Fellowes Powershred DS-2 (about $100 online) -- to make sure your account numbers can’t be re-created. You can ditch receipts for anything that’s not tax-deductible, pitch pay stubs after you get your Form W-2, and toss bills older than 12 months—unless you can find them online, in which case you don’t need to keep them at all.

Appliances and electronics. Your local government or your electric utility may offer a “bounty” program for old refrigerators and freezers, providing free pickup and sometimes an incentive payment, too. To find the nearest steel recycling center, use the Steel Recycling Locator at www.recycle-steel.org. Most manufacturers and some big-box stores offer recycling for electronic products. See the EPA’s eCycling list.

Hazardous waste. Check with your county or municipality or visit Earth911.com to locate a facility where you can drop off automotive and home-improvement detritus (such as paint and solvents), cleaning products, and pesticides for disposal or recycling. You can find locations to drop off rechargeable batteries at www.call2recycle.org. Take compact fluorescent bulbs to retailers such as Home Depot, Ikea and Lowe’s.

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