Valerie Coleman Morris helps you with pain-free financial record keeping: it's tax season! Here's how to organize your chaotic financial records once and for all - your money - Column

YOU CAN DO THIS. You really can. You know that shoe box or shopping bag you've got stuffed with all your financial papers? Getting it organized is the first step toward controlling your financial life--not to mention getting your taxes ready. The key is keeping the system simple.

FIRST visit an office-supply store and buy a cardboard file box, pocket file folders, two three-ring binders with dividers and a fireproof storage box. (A fire-retardant case large enough to hold a binder and your important document files may cost you $65 or less.) Also buy a paper shredder. With high concerns over identity theft (someone pretending to be you acquiring money or credit in your name), a shredder is an investment you can't afford not to make. It's a potential miscellaneous tax deduction too. A basic shredder costs less than $40.

AT HOME go through the contents of your shoe box or shopping bag with a "file it or toss it" mentality. Throw away solicitations and other unwanted mail. Set aside your bills, account statements and other business papers. Then organize them by year into file folders as follows: Assets (bank, brokerage and retirement statements); Company Benefits (such as 401[k] and pension-plan brochures); Insurance Policies (life, disability, medical, home owners' or renters', auto); Estate Documents (wills, power of attorneys); Tax Returns (including backup documentation); Outflow (statements from all monthly recurring bills such as utilities, phone, grooming); Inflow (pay stubs and other cash receipts); and Liabilities (statements on money owed such as mortgage or rent, credit cards, student loans, car loans). Store these folders in your cardboard file box.

CONGRATULATIONS! You're halfway through what seemed impossible. You can now access important financial records and documents anytime you need to--without a hassle.

NEXT set up a financial notebook. Divide your binder into four sections and mark them Money, Documents, Directories and Financial Future. In the Money section, list bank, investment and credit-card accounts. Under Documents, put the name and/or precise location of deeds, insurance policies and current year income-tax files. In the Directories section, list information your family would need should you die or become incapacitated. In Financial Future, list your financial-planning goals.

SOME ITEMS should be stored in your newly purchased fireproof box. These include a duplicate of the financial notebook you just created, your will, a durable power of attorney (especially important for single individuals, this document names the person who will make decisions for you if you become incapacitated), property-tax receipts and recent tax records.

THAT'S IT Your papers are in order. To make what you just did a habit, sort new mail immediately into its dedicated file. And get organized well before April 15. Good record keeping is the easiest way to potentially decrease your tax liability, because you'll keep up more easily with all potential deductions.

HOW LONG should you keep financial papers? Says certified financial planner Gary Ambrose of Personal Capital Management, Inc.: "Keep brokerage and bank statements and tax returns and backup documents for seven years. As for any major items that you buy, such as property or stocks, keep those records `forever' or until you sell."

FINALLY Remember the art of safely disposing of your old financial records. Shred everything! Here's to your wealth!

Valerie Coleman Morris is an anchorwoman with CNNfn.

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