As we have begun the process of decluttering our house, I had a revelation while working in my office over the weekend: I don’t need to keep all of these receipts. I asked myself why I was keeping all of these receipts, and I realized that I would never track every dime in Quicken and even if I started to do so there would be no benefit to tracking spending from 2003 (yes, I had receipts that old and older). The revelation led to a new method for saving receipts and tracking purchases:

1. Receipts for large purchases and items that could still be returned or are still covered by a warranty should be scanned and saved in a special file.
2. Receipts for tax deductible items like charitable contributions should be saved in their own file with the support for that year’s income tax return.
3. Current receipts should be reviewed so I can classify the purchases properly in Mint.com (one of the coolest sites ever, btw) and filed in envelopes by month.
4. Once the tax return is filed for the prior year, all receipts not supporting a tax deductible item or a large purchase (see #1 above) should be shredded.

This system saves the important stuff and ultimately disposes of 95% of those receipts. The only reason for even saving the current year receipts until you file your taxes is to allow for mid-year tax code changes resulting in new deductions. A perfect example is the reintroduction of the sales tax deduction a few years ago. The tax code was changed to allow you to deduct sales tax paid in leiu of state and local income tax, with the deduct amount being a predetermined amount based on your income and number of dependents or on actual receipts. Additionally, if you used the predetermined amount there were certain large purchases you could add. This was great, but since they enacted the change mid-year you could have very easily thrown out deductible receipts because they weren’t deductible at the time.

So far I have shredded two large bags full of receipts, and it has been an interesting experience. The oldest receipt I found was for a computer I bought in 1998 that I gave away several years ago. I also found tons of receipts so old that the thermal printing had faded away. As I went through all of these receipts, I’d look at some of this stuff and wonder why I spent the money on that. Other receipts would bring back fun memories, like the great CVS raids of 2004 when CVS was just entering the Houston market. We lived in an apartment complex at the time and CVS sent a mailer with several coupons for free items in various categories. Most of our neighbors just pitched them in the garbage next to the mailboxes, so I went and dug out as many as I could and the wife and I raided CVS for free stuff for several weeks. And to make it better, they sent another round of coupons about a month later and we did it all over again! I still have lotion, shampoo, and conditioner from that deal! Oh the memories!

Anyway, I hope this helps some of you other OCD people out there to tame the paper monster.