Ask Unclutterer: How long should I keep bills that have been digitally scanned?

Reader Volker submitted the following to Ask Unclutterer:

I have all my papers (bills, documents etc.) digital, so its no physical clutter. But I’m not sure how long to keep digital files like itemized bills, phone bills, electricity bills, etc.?

The answer to this question, unfortunately, can be found in your responses to a few more questions:

  1. How much space do have available on a hard drive?
  2. How often do you reference your paperwork after you have scanned it?
  3. How distracting do you find digital files?

If you aren’t pressed for space on your hard drive and you aren’t distracted in any way by the digital files, I recommend keeping them. The act of sorting through each one and expending mental energy deciding which documents to save and which ones to delete can clutter up your time. Simply put, they may not be clutter.

However, if you need to free up some room on your hard drive, I’d take the following steps:

  1. Keep all digital copies of bills from the past 13 months. When your new bills arrive, it’s always a good idea to check the new ones against the previous year to see if there are any strange fluctuations.
  2. If the bill was used as a deduction for tax purposes, hold onto it for whatever amount of time your accountant recommends. This time period is usually however long a federal tax agent can go back in time for an audit. Based on the laws in your country, you may actually need these bills in physical form. Again, check with your accountant.
  3. If the bill wasn’t used for a tax deduction, I recommend keeping all annual statements for as long as the account is open.
  4. If you have closed an account, I recommend keeping the statement from the billing institution that says your account was closed in good standing. I actually recommend keeping this in physical form and not in digital form — but if you’ve already scanned it, the digital copy is better than nothing.

Unlike many of our readers, I don’t see digital data as really being clutter. At least for me, it doesn’t distract me from pursuing the life I desire or keep me from focusing on what matters most. I use Google Desktop to easily search my computer for any documents I’m seeking. Honestly, I have files on my computer from 1998 and have no plan to delete them. I also have an onsite backup and an online backup, so if my hard drive fails I won’t lose everything.

Thank you, Volker, for submitting your question for our Ask Unclutterer column. Good luck to you on your digital data project.

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21 Comments for “Ask Unclutterer: How long should I keep bills that have been digitally scanned?”

  1. posted by Cindy Marsch on

    When we moved to California in 1992 we had to pay a $300 (?) smog impact fee on our car, which was years later declared illegal/refundable, including interest. Problem is, the refund process was complicated and required a copy of the canceled check paid to the DMV. I had paid that fee with a brand-new temporary check from our new bank and somehow had misplaced the statement (though I had others from the same time period). In about 2003 I got final notice from the state that they “could not” refund my money (of course they had no record of it).

    That still galls me.

  2. posted by Katie on

    I keep all of my scanned stuff in a tucked-away part of my computer so it doesn’t make me antsy. I organize it by year and then by category (utilities, health insurance, auto, taxes, etc.). So if I’m filing a new power bill, I don’t have power bills from 2006 staring me in the face.

    Hard drive space is so cheap these days, it wouldn’t occur to me to delete it. But if I did ever want to, this would allow me to delete everything from a distantly past year all at once.

    I do have a general folder for things that aren’t year-specific.

  3. posted by Elaine on

    How about this: Scan your documents, then arrange them in folders such as “tax documents from 2010,” “Utilities from 2010,” “Bank statements from 2010,” etc. so that when the appropriate amount of time has passed, you can feel comfortable deleting documents that don’t need to be kept. Tax documents can be kept forever if you want to play it safe. But this way you won’t have to scroll through file after file, trying to choose which ones to delete and which ones to keep.

  4. posted by Matt Blank on

    I use Quicken 2010 and it lets you attach the digital scan of your receipt, invoice, etc to the transaction entry in the program. I always put my utility transaction with the digital scan into Quicken and then shred the paper document. If I ever need a copy of the paper in the future I can go back to the transaction and print it out again.
    I also organize non-bills into folders from the entity that sent it to me, and name the PDF something helpful. Then at the end of the year I zip up the entire set of folders into a year end file. Saves space and keeps things clean that way.

  5. posted by Data Nazi on

    #2 should really be the prime, and maybe only consideration. Do not make a decision to store/not store based on available space. If you reference your paperwork 7 years back and you’re out of hard drive space at 5 years, it’s time to get a new drive, or add storage some other way…if you need it, you need it. Storage is incredibly cheap these days…certainly cheaper than the hassle of needing to produce documentation you don’t have!

    As for #3, if you find digital files distracting, why are you storing digitally at all? Adopt a good indexing/search solution. Such a system shouldn’t be a distraction, it should be a way to *avoid* distractions.

  6. posted by Jessiejack on

    Thanks Matt for the info about Quicken 10. I am using an older version and would find that useful. I am also looking at the freedom filer with its handy way of managing the actual paper.

  7. posted by Mike on

    Why delete them? Just put them in an “archive” folder, maybe by year and let search take care of finding old stuff for you. Disk space shouldn’t be a significant issue, and if it is, use one of your older backup disks to migrate older stuff to and call it your “archive” disk for stuff greater than a year. Next time you upgrade your machine (or disks), you’ll have plenty of space to store everything important on the primary disks.

    You are backing up your files to backup disks regularly, right?

    – Mike

  8. posted by Lee on

    Backing up is so important, although we’re better at saying it than doing it. We’ve had 2 PC’s repaired and both times, they’ve lost all of my e-mail files with much genealogy information and many contacts. We just moved and when my husband set up the PC and turned it on, it had the blue screen of death.

    I always fear that the technology we trust today may not be usable at some time in the future. My MIL has our extended family data, which she sent to us a couple of times a year, on a spreadsheet in a program that won’t work on her new computer and her old computer is dead.

    When my FIL applied for Social Security, he was told that he didn’t pay income tax for one year about 30 years previously. It was going to affect his SS income greatly. He went home, found the check, and now collects the amount he deserves. I vote for saving everything you can comfortably save and labeling well (no hoarding boxes that block exit routes or fall on you and kill you), even if it’s past the suggested number of years.

  9. posted by carla on

    Actually, if it’s not in 3 places, one off-site, then it’s not backed up.

    We pay $1.00 a month to Amazon Web Services for secure off-site storage. We have copies of all our pictures and important documents there. That seems more secure to me than than one physical copy somewhere in my house. (we move a lot too, so I have lost important papers between here and there)

    Okay, maybe I haven’t put the last month’s scans in the clouds. But I called my husband because we just added a drive and he laughed when I asked if I could use it for backup before I shredded the paper. I don’t shred until it’s in at least 2 places.

  10. posted by Jill on

    I have a lot of digital files (mainly PDF’s) that I keep in a “Misc Stuff” folder on my computer.

  11. posted by Ines on

    I am sorry to ask such a basic question but all the time while reading the post and the comments to it I am wondering: Are scanned bills accepted? I.e. if you bought and item and it is now broken during the guarantee period. I mean, the shop owner could still accuse you of having copied it several times to deceive him and get a new item over and over.

  12. posted by luxcat5 on

    @Ines I am curious about that too!

    Also, maybe I didn’t read close enough but please folks, PASSWORD PROTECT all this stuff somehow. If someone takes your computer/hard drive or (more unlikely) hacks into the online storage, you don’t want them to have access to things like credit card bills, social security documents, health care bills, etc with VERY personal info on them that could be used to steal your identity.

  13. posted by carla on

    The salesperson just the other day suggested that I scan the receipt because the (not) quality ink they use will fade. Having a digital copy may be the only way to produce the receipt.

  14. posted by Letha Kern on

    Why do we need to keep paid bill receipts ( not tax related) when u can access them on your utilitie’s web site ?
    I ,too, use Quicken so perhaps I already have a ready access to copies or proof of payment.

  15. posted by Hessiess on

    As long as you keep an organised file system, keeping a large amount of digital data is not a problem. With the ever increasing capacity and low cost storage available there should be no reason to ever delete files, besides scanned documents don’t take up that much space anyway. If you are short of storage, just put in a bigger hard drive.

    For the sake of data/disaster recoverability all user data(everything besides the operating system(OS)) should be stored on a different partition or hard drive from the OS.

    On a side note, make sure that documents are never saved as JPEG images. JPEG is extremely bad at handling images containing large areas of flat colour, resulting in a lot of bad, very obvious artefacts. Instead use a lossless compressed format like PNG, PDF is also OK.

  16. posted by Hessiess on

    @luxcat5: Simply password protecting the data is not adequate, OS level password protection is trivial to break, just put the HDD in a different computer or boot off a live CD. For it to be secure, the data must be encrypted using a known secure algorithm and a very strong(non dictionary word, long and random) password/pass phrase. You can use truecrypt (http://www.truecrypt.org/) with ether a encrypted virtual drive(basically an encrypted zip file) or whole drive encryption. Be aware that if you loose the password for a truecrypt volume, there is NO WAY to recover the data.

  17. posted by Ellen on

    I’ve been scanning bills for a while now, using DevonThink Pro and a ScanSnap. I don’t really have an organized version of this, they just go into one big pile and I use the search tool to find things. Organizing them is always “something I’ll do when I get time,” and I don’t get time. I haven’t had problems finding stuff so far, the OCR is pretty good.

    My problem now is that I have two kinds of clutter – electronic clutter AND paper clutter. What do I do with the paper versions of the bills (for those that come in paper version – many of the bills are coming in electronic-version only, which definitely helps the clutter situation)?

    I expect this topic has been covered here before – just help me find it ;)

  18. posted by Elaine on

    With regard to getting your old bills from a utility company, that’s probably not difficult, but I have found that lots of credit card companies balk at supplying archived statements beyond 6 months or so. I’m not sure why that is; I just put it down to their basic arrogance and keep .pdf versions in the cloud on general principle.

  19. posted by Jan Wencel on

    For those who’ve decided to stick with paper have the same “how long to keep” question. FreedomFiler.com, a paper-based system mentioned a few days ago, is a quantum leap from traditional filing systems. It encourages you to purge 1/24th of most of your papers every month…and then allows for a 10-year (or longer, if you like) tax archive.

    I help people file their papers for a living, and I’ve come to like FreedomFiler best. It’s tough to intellectualize how it changes things at first, but once the light bulb goes on, you’re hooked.

  20. posted by Sophia on

    I just graduated, so I guess I don’t have as much paper work as “real adults,” but I know that Chase offers online statements dating 6 years back if you chose no-paper billing. That way, it’s all kept for you for an appropriate amount of time, there’s no disk space wasted on it, and it’s all organized and accessible from everywhere in the world! :)

  21. posted by JustGail on

    I’ll have to bookmark this post!

    Regarding utilities bills, definately keep any bills/checks for deposits. I think our local phone company was quite amazed that we still had the deposit information after 30 years.

    I do have a question regarding investments. I know you are to keep all buy/sell and annual statements. But what about letters from your 401k that are of the type “we are moving your money in fund A to fund B on this date, as a result of changes we are making”. I was going through my financial papers, and cleaning out the quarterly statements, but I’m stumped by these letters, so I’ve kept them so far. Thanks for any enlightenment!

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