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| The Basics | Lied to get a loan? 'Fess up
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Readers write in for advice on how to solve financial woes, including what to do when your lie has ruined someone else's credit.
By Liz Pulliam Weston
Dear Liz: Three years ago I did a terrible thing. I forged my mother's signature as a cosigner so that I could buy a car. Then I lost my job and fell behind on the payments, so the car was repossessed.
Of course, all this is on my mother's credit reports, and when she found out she was livid. Several times over the last three years she has tried to have her name removed from the loan, but the lender says she has to file a police report against me first.
I can't tell you how horrible I feel about this whole situation. Do you have any suggestions?
Answer: You can insist your mother file the police report.
Yes, she will be exposing you to possible arrest and prosecution. But the lender has made it clear that her credit won't be cleared without it. You would be taking responsibility for what you did and freeing her from the consequences of your actions.
Otherwise, your mom will have to wait seven years from the date of the repossession for the negative mark to fall off her credit reports.
Its effect on her credit scores will lessen over time but could still make it difficult for her to get credit -- and increase the interest rates she must pay. That's a stiff penalty to pay for a situation over which she had no control.
Dear Liz: You had a column last year about what documents to save, and for how long. I put it aside, but now I can't find it. Would you mail me a copy?
Answer: Well, no. But with the idea that it's better to teach a reader to fish than to mail her the fish wrap, here are a few ideas for better managing your paper flow.
The guidelines for keeping and discarding paperwork aren't all that complex. If it has to do with taxes, you'll generally want to hang on to it for seven years. The exception is for assets that may incur tax when you sell, such as a home or an investment. In that case, you'll want to keep the paperwork for as long as you own the asset, plus seven years.
If you make a nondeductible contribution to an individual retirement account or other retirement plan, keep the paperwork indefinitely. You can subtract a portion of those contributions from future withdrawals, which will save on taxes.
If you get a periodic summary of your transactions, you can generally discard the interim paperwork. In other words, you can toss your pay stubs once you've checked them against your W-2s, and your automated teller receipts once you've compared them against your monthly bank statement.
If you make a big purchase, keep the receipt for as long as you own the item. A receipt can help in the short run, when you need to return an item, and in the long run, by establishing its value for insurance purposes.
Old insurance policies and paperwork can be discarded once they're replaced with new versions and there's no longer a possibility of filing a claim.
Most people hang on to way too much paper, fearful that they'll need it somehow, someday -- when actually all it does is add to their clutter.
Professional organizer Debbie Stanley, author of "Organize Your Personal Finances in No Time", recommends an annual purge of your paper, and tax season is as good a time as any to tackle that.
Once you're done, though, consider creating one new file -- for helpful newspaper articles. Then you'll be able to put your hands on the information right when you need it.
Liz Pulliam Weston's column appears every Monday and Thursday, exclusively on MSN Money. She also answers reader questions in the Your Money message board.
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MSN Money's editorial goal is to provide a forum for personal finance and investment ideas. Our articles, columns, message board posts and other features should not be construed as investment advice, nor does their appearance imply an endorsement by Microsoft of any specific security or trading strategy. An investor's best course of action must be based on individual circumstances.
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