No Debt Plan

No Debt Plan is a blog about living a debt-free life. If you're new here, you may want to subscribe to my RSS feed (e-mail subscription also available). Learn more about me, or some of my most popular posts. Thanks for visiting!

(Photo: Hipster PDA)

Earlier this week I gave you five easy steps to documenting everything you own in case disaster strikes. Step four in that process is creating extra paper or electronic documentation on top of just taking photos or a video. I’m going to walk you through how to do that today.

Tools to use for creating extra home documentation

You don’t need to buy any special kits to create this extra documentation. Here’s a quick list of options:

• pen and paper
• Microsoft Excel or Open Office Spreadsheet
• Home inventory software like Quicken Home Inventory Manager

The first two options are free, the third will cost you some money. I’m all about free. Pen and paper is simple enough, but I’m a huge fan of Excel/spreadsheets. You can set up multiple tabs, one for each room of your home. Let’s give it a try.

1. Rename your tabs from “Sheet1″, “Sheet2″, and “Sheet3″ into individual room tabs.

It will be much easier to understand what “room” you are in if you name the sheets properly.

It might go from looking like this:

To something like this:

2. Label columns as “Item”, “Estimated Value”, and “Serial # (if applicable).

You could also add a “scanned receipt” column if you were scanning receipts for major items. I put a title up at the top for the room as well, just as a reminder… you don’t want to get confused by adding items from the living room into the office spread sheet, or vise versa.

It might look something like this:

3. List all of the items of value in that room.

Don’t waste your time with items that aren’t truly valuable. “Stack of old magazines” is a waste of your time unless it they’re from a museum collection. Same thing with “pile of dirty socks.”

4. Do step three for every room in your house.

Go through your closets. Look under the bed. You’ll have items of value there that you inevitably will have forgotten about. (And maybe this is a good time to sell/donate some of the old junk you don’t use!)

5. (Optional) Have a master spreadsheet that copies everything from the other sheets and displays it as one long page.

Instead of having to click through multiple tabs, you can set up a formula to copy all the information from each sheet into one master sheet. This way you can scroll down (or print it off) and have one giant list.

6. Print multiple copies, store them in a safe place. Distribute electronic copies to safe, online storage areas.

As I mentioned last time, keeping your copies in your house does you absolutely no good. If the house burns down, the spreadsheet or file of paper you have your documentation on is likely to be gone for good. Send copies to your parents or to a safe deposit box more than 50 miles from your current location.

So what are you waiting for? Get off the computer and document your belongings! You never know when disaster might strike…

Or have you done it already?

There was a discussion over at the GRS forums that made me want to write this. What do you do with all of those bank and credit card statements that come to your house? Throwing them in the trash is asking for trouble. Identity thieves could steal your information and then you’ve got a whole new set of problems to deal with.

I recommend buying your own paper shredder. But is a shredder really worth it?

The likelihood of someone stealing your garbage that just happens to contain a piece of paper with your social security or account number on it is slim. Still, identify theft does happen and it is a major pain to get cleared up. How would you like to not only have to completely start over with your financial life, but when you start you are further back in the race than you were when you started originally? It must be very frustrating. Varying reports have said it can take more than 60 hours to recover from identity theft. Thankfully (knock on wood), I have never experienced it.

A lot of personal finance is changing habits. Buying a shredder is just another way to change your behavior ever so slightly for a positive result. You want to completely destroy anything with your social security number, account number, or other sensitive information (brokerage statements, what’s left of your checkbook after the last check, etc.). I even shred the return portion of credit card offers. Every day we go through the mail and sort it into various piles. There’s an action pile, a throw away pile, and a shred pile. A very simple system. It takes maybe an additional minute to shred the extra documents rather than just throwing them away. I feel the effort and cost are definitely worth it.

Types of Shredding

There are several different types of shredders. Money magazine did a test a while back for home use (the website says the article is from 2005 and I have to think there was another best since then, but I can’t find it). What we use is a 8 sheet cross-cut shredder. A cross-cut does exactly what you might think it does — it shreds sheets in both diagonal directions. This results in small diamond shaped confetti. I guess if someone was really determined they might be able to piece all of the small pieces back together, but this works for us.

In the discussion at the GetRichSlowly forums (linked above), someone mentioned there are different levels of shredding quality. I found a website, ABC Office, that discusses the various types of security.

Our shredder cost $50 at Office Depot. You should be able to find one for a similar price point, maybe even less. If you use FatWallet, you could probably earn some cash back. It is a bit of an investment, but it gives us peace of mind.