Maybe it's time for a new reality series: Extreme Financial Records Makeover. An army of financial planners and accountants, armed with file folders and a giant shredder, would descend on a household and organize the family's file cabinets.

Extreme Financial Records Makeover probably wouldn't attract as many viewers as Wife Swap, but it would have no shortage of eager contestants. In households across the country, drawers and file cabinets are overflowing with investment statements, bills, insurance policies and warranties for blenders thrown away years ago.

Worse, many families keep all this stuff "in a location that's not safe or private," says Nathan Mersereau, a financial planner at Oakland Wealth Management in Southfield, Mich. And when it comes time to locate important financial information, it's impossible to find.

You can conquer the mountain of paper if you understand what you need to keep and what you can safely shred. Some guidelines:

•Tax returns. The IRS has three years to challenge information in your return and six years to conduct an audit based on unreported income, Mersereau says. So a good general rule is to keep your tax returns and supporting records, such as W-2s and 1099s from financial institutions, for at least seven years.

Some planners advocate keeping your tax records indefinitely. Your tax returns provide a snapshot of your household income over time. And there is no statute of limitations on audits if the IRS believes a return was fraudulent.

Most people are reluctant to discard tax records, says John Sestina, a Columbus, Ohio, financial planner. "If you've ever been audited, you'll understand why."

•Investment statements for taxable accounts. Most brokerage firms and mutual fund companies send annual statements summarizing the year's transactions. Once you receive one of these, you can shred your monthly and/or quarterly statements.

Keep records of the price paid for stocks and mutual funds. You'll need them to figure out how much you owe in taxes when you sell. Keep trade confirmations for up to seven years after you file a tax return showing a gain or loss from selling a security, Mersereau recommends. That way, you'll have supporting documents if the IRS questions your return.

•Retirement plan contributions. Keep records of contributions to non-deductible individual retirement accounts, such as a Roth IRA, indefinitely. You'll need these to prove you've already paid taxes on the contributions. Without them, you may find yourself paying taxes again when the money is withdrawn. Some financial institutions keep records of IRA contributions, but don't count on it, Mersereau says. "The burden of proof is on you."

•Bank statements. Keep statements that back up information on your tax returns for up to seven years. Other bank statements can be shredded after reviewing for errors.

•Credit card statements. Hold on to statements for big purchases, such as jewelry or large appliances. You may need them to file an insurance claim or a warranty. If you put charitable contributions on your credit card, keep the statement for your tax records. Other monthly credit card statements can be shredded once you've reviewed them for errors or unauthorized purchases.

• Insurance policies, wills and other legal documents. These documents should be kept indefinitely. Many people store their wills in a safe-deposit box, but that could create problems for your heirs if you die unexpectedly. Your safe-deposit box may be sealed until your executor or heirs can prove they're authorized to open it. You can avoid that problem by putting someone else's name on the safe-deposit box, such as your spouse or a trusted relative, Mersereau says.

Alternatively, store the documents in a safe and accessible place, such as a fireproof box in your home, says James Kibler, a financial planner at Eldridge Financial Planning in New York. Make sure your heirs know where to find the key.

Saving trees

Storing documents electronically on your home computer offers several advantages: You can find information you need more quickly, and you're less likely to misplace an important document. Many financial institutions will provide electronic versions of statements and records. And for less than $100, you can buy a scanner that will zap paper documents into your computer.

How to ensure your electronic documents are safe and accessible:

•Back up everything. A hard-drive crash could wipe out your entire financial existence in seconds. Transfer your records to a floppy disc or CD and store it in a safe place. Some programs will let you add password protection to your backup discs, which provides additional security.

•Develop a system for naming files so you can locate them quickly. Otherwise, you'll waste time searching for the electronic version of your brokerage account or your tax return from 1995.

Organizing your files

Whether you're storing documents on paper or electronically, it helps to designate folders for several categories of documents. Sestina typically puts his clients' documents into the following categories:

•Notes. Notes from meetings with your financial adviser, attorney or your accountant. File them chronologically, with the most recent at the top.

•Personal information. Passport, birth certificate, driver's license.

•Income. Tax returns, budget information.

•Net worth. Non-investment documents, such as titles to your car and home mortgage.

•Investments. Brokerage statements, trade confirmations.

•Business interests. If you have self-employment income from a side business, use this file for contracts and other self-employment information.

•Insurance. Life, health, disability and auto policies.

•Estate planning. Copies of your will, power of attorney, health care proxy, living will and other estate-planning information.

•Dependent planning. Custodial accounts and other financial information for your children. If you're handling financial affairs for an elderly parent or other relative, store their financial information here, too.