If the shoebox organization system is not working for you, then the time has come to dump out the box full of papers and receipts and create an organized financial system. While this dreaded process might take several hours or days, once it's done, the sense of satisfaction you will feel will make it all worthwhile.

The papers in your shoebox will vary by importance, ability to replace, and need for accessibility, and, therefore, should be stored accordingly. The following list outlines some of your record storage options:

Now that you know the types of storage available for your records, lets discuss what you need to keep and where you should keep it. The categories we will explore include personal papers, insurance policies, tax returns and receipts, paycheck stubs, bank records, monthly credit card statements, receipts, appliance instructions and warranties, retirement plans, investments, real estate documents, debts, money owed to you, and other important documents.

Most personal papers are important to keep and inconvenient to replace, and should be kept in a safe deposit box or a fireproof safe. Examples of personal papers are:

• Current copy of your will. You may also want your lawyer to retain a copy, in case your loved ones are unable to gain access to your safe deposit box until the executor is identified. Be sure to destroy old copies of your will to ensure that the wrong version is not used to carry out your wishes.
• Trust documents
• Birth certificates for all family members
• Deeds to cemetery plots you own
• Marriage license
• Separation and divorce documents
• Military service records
• Citizenship documents
• Adoption papers
• Diplomas
• Licenses
• Permits
• Union cards
• Social Security cards
• Passport
• Power of attorney. Be sure to provide a copy of the document and access to the original to the named person, so your wishes will be carried out in the event you are incapacitated.
• Living will. Also keep a copy in your files or provide a copy to the person who will be responsible for carrying out your wishes.

Insurance policies are replaceable by the insurance company, but you should still keep your current version in a safe deposit box or fireproof safe. Keep a copy in your file cabinet in case you need to review the policy or file a claim, along with any correspondence you have had with the insurance company or claims you have filed. Examples of insurance policies include:

• Life, including any policies you have through your employer
• Mortgage life
• Credit life
• Health
• Disability
• Homeowners. Although you will receive a new version every year, it is important to keep old versions for the past three years in your file cabinet in case someone was injured on your property and you have to prove that you had insurance at the time. Along with your homeowner's insurance policy, you should also keep a list and pictures of your possessions to provide to the insurance company in the event of a fire. An effective way to create a household inventory is to use a video camera so you can make comments about each item, especially those of value. It's always a good idea to have you valuable items, such as antiques, jewelry or furs, appraised. Remember to record and photograph new items that you purchase.

While it is a good idea to keep all tax returns to maintain a record of your financial situation, you only need to keep returns and supporting documentation for the past three years to satisfy the IRS in the event of an audit. The statute of limitations for the IRS to investigate your return is three years, but if you underreported your income by more than 25 percent, the IRS has up to six years to audit you. Additionally, if the IRS suspects fraud, there is no time limit in which they can audit you. Keep tax returns and all supporting documentation from the past three years in your file cabinet. If you have underreported your income, or choose to keep all of your returns, store them in a box in the attic, otherwise, add them to the circular file.

It is always a good idea to keep your pay stubs to compare to your W-2 at the end of the year. Additionally, pay stubs provide a record of hours worked, overtime, and bonuses. After you have determined your salary on your W-2 to be correct, you can throw your pay stubs away and file your W-2 with your tax records. Don't forget, charitable contributions taken directly from your pay are not reported on your W-2; therefore, you must keep your pay stubs to file the deduction on your tax return. If you are self-employed, you should keep all of your pay stubs to ensure that your earnings are correctly reported on all of the W-2s you receive, and you may need them for documentation when you file your 1099.

The most common bank records include cancelled checks and monthly statements. You only need to keep cancelled checks as supporting documentation for tax returns for three years, but there are many other reasons why you might want to hang onto them as well as your statements:

• Helps you keep track of where your money is going. This is especially helpful if you are trying to create a budget. Cancelled checks provide a clear picture of where you are spending your money.
• Serves as proof of payment, i.e., in the case of an audit, for your insurance company when you file a claim, or for a debtor who claims you did not pay them.
• Provides a record of whom you've been doing business with.
• Serves as proof of payment for home improvements, which may help you minimize the taxes you may owe when you sell your house for a profit.

Cancelled checks for the past three years can be stored in your file cabinet. If you choose to keep them after that time, store them in a box in your attic; otherwise, add them to the circular file.

Other bank records include loans and certificates of deposit. Store the original documentation in your safe deposit box or fireproof safe. Keep the most current statements in your file cabinet and add the outdated ones to the circular file. When you make deposits or payments, keep the record until you receive your statement to ensure accuracy. Save any correspondence from the bank regarding fees or interest rate changes, in case you question your account in the future. Also, it is wise to keep a record of your PIN number in case you forget it. When the loan is paid off or the account is closed, you can throw the contents of the file away.

In order to ensure that you are not double charged for an item, you may want to retain your credit card statements for two years. If you purchase an expensive item, you may want to save that particular statement in case you need proof of purchase for an insurance claim. Otherwise, after two years, if you do not wish to retain the statements for your records, you can add them to the circular file, but be sure to destroy them to prevent theft of your credit card number.

These days, you receive receipts for almost everything you purchase, but it is not necessary to keep all of them:

• If the receipt is for an item that is tax deductible, attach the check to it and file with your supporting tax information.
• If you make a purchase for a high-cost item, such as jewelry, furs or antiques, keep the receipt in your safe deposit box or fireproof safe in case you need to file a claim with the insurance company.
• If you give or receive a gift, keep the receipt until you have determined that the gift will not be returned. If you do take the gift back, keep the receipt until the credit appears on your credit card statement.

Mark the serial number and the date you purchased the item on the appropriate booklet and store in your file cabinet. Throw the warranty documents away upon expiration.

You should retain all medical and drug bills if you are in a dispute with your insurance company until the disagreement is resolved. It is also wise to keep medical and drug bills in your file cabinet for a year, in the event of a medical emergency in which the expenses may exceed 7.5% of your income. In that case, you can take a deduction on your tax form.

For each of your retirement accounts, keep the account numbers, company names, and phone numbers in your safe deposit box or fireproof safe. In your file cabinet, keep all annual statements and plan documents. If you have taken a loan against any plan, keep a record of that in your file cabinet. Also, if you make a withdrawal from an account, keep the record until you receive your statement, then it can be thrown away.

• In your safe deposit box or fireproof safe, keep certificates of ownership for your stocks, bonds, and other investments.
• Save all monthly statements until you receive your annual summary statement. If the annual summary is accurate and shows transactions for the past 12 months, you can throw the monthly statements away. It is important to retain this documentation to compute your taxes to account for dividend and interest earnings, and to report a gain or loss when you sell your investment.
• Keep all trade confirmation and dividend statements with your tax records for the year that you claimed a gain or loss from the sale.

When you acquire real estate, you should keep all of the papers that you receive during closing. The following list provides some insight into the more important documents that should be kept in your safe deposit box or fireproof safe:

• Title to your home
• Deed of purchase
• Mortgage contract
• Sales contract
• If you inherit property, keep an assessment of the fair market value of the property. You will need this to determine a gain if the property is sold.
• If you rent the property to tenants, keep the original rental agreement in your safe deposit box and a copy in your file cabinet.

Other important documents, which you can keep in your file cabinet, include the current tax assessment on your property and your homeowner's association agreement.

It is wise to keep your mortgage contract in your safe deposit box or fireproof safe, but you may want to retain a copy in your file cabinet. With that, you should keep a record of any loans you may have, including student, car, and home equity loans. When the loan is paid off, you can throw the documentation away, retaining only the final statement that shows the loan paid in full. The titles to your cars should be kept in your safe deposit box or fireproof safe.

• Store the proof of the loan in your safe deposit box or fireproof safe. Keep repayment records in your file cabinet. When the loan is paid off, move the loan note to your file cabinet.
• When you first move into your house or apartment, make a record of the deposits you made to set up your utilities and to your landlord. Most are refundable when you move.

• Income and expense records from a rental property should be kept for three years in your file cabinet.
• Keep your cancelled checks for charitable contributions and gifts with your tax records for the year that you claimed the deduction. If you give over a particular amount, you will need a letter from the charity to provide additional proof of the contribution. Also, keep appraisals for donated property for income tax purposes.
• Maintain a record of the mileage you accrue for volunteer work. This expense can be deducted.
• Create a file for your last wishes, which should include final funeral instructions, material for your obituary, and a copy of your cemetery deed. This can be stored in your safe deposit box, with a copy in your file cabinet. Be sure to tell the executor and family members about the file to ensure that your final wishes are carried out.
• Keep the key to your safe deposit box, along with the name and address of the bank, in your file cabinet or fireproof safe where your executor can easily find it.
• Create a master file list detailing where all of your important records are stored. This will not only help you find the documents in case you forget where they are, but will also help your family access the information in the event of your death.

So, what does your organization system look like? With so many important papers to keep track of, you may want to get started right away with some of the tips and ideas in this article. Creating an effective system for organizing them will simplify your life. And, knowing the right place to store your documents is just as important. While the task may seem daunting, the benefits you reap will far outweigh the time spent doing it.