A safe deposit box may seem big and bulky, and can take up a lot of space. However, in today’s day and age of ever changing weather events, and life changing moments, you never know when you might need one.
Safe Deposit Box: An Ounce of Prevention
The last thing you want to have to worry about should disaster strike is finding your important documents and files. A safe deposit box can help with this, and would highly advise all readers to look into obtaining one in some shape or fashion.
A good record-keeping system is one that is (a) complete enough to be effective and (b) simple enough that you will use it regularly. The computer can be a big help in your record-keeping but it is not essential. Even genuine computer enthusiasts will still have to maintain some paper records. Every good record-keeping “system” has three main components:
A safe deposit box that should contain important personal papers that are either impossible or very difficult to replace if lost or destroyed. Be sure to keep a summary of the contents of your safe deposit box in order to avoid a wasted trip to the bank looking for something that isn’t there. A home safe is an alternative that you may want to consider. Just make sure that the safe is both secure (for example, bolted to the floor) and fire resistant.
An active file kept at home that keeps track of personal papers and important information necessary to help in preparing your current year’s tax returns. Because the active file needs to be easily accessible, it should be located in a convenient and pleasant location. It doesn’t need to be fancy; a few manila file folders should suffice.
An inactive file kept at home or in storage primarily for the purpose of proving past tax returns. A few other items should also be kept in your inactive file, including invoices and canceled checks pertaining to any home improvements and investment statements necessary to substantiate capital gains and losses. If you’re brokerage or mutual fund firm maintains all of the required capital gain information, you probably don’t need to keep past investment statements. You may also want to keep in the inactive file important papers that are not currently needed, such as family health records and proof that major debts and other contracts have been discharged.
As you go about organizing or improving your personal records, take the opportunity to get rid of unnecessary papers. You don’t need to hoard personal papers in order to fill up your presidential library. You don’t need to keep receipts and bills and bank statements for years on end. You might even want to regularly repeat the mantra: “when in doubt, throw it out.”