Investing in a filing cabinet is a great way to free up space in your home office. Buying a fireproof cabinet that also locks helps ensure that your important documents won't get stolen or destroyed. A locked, fireproof container is essential for really important documents, like birth certificates, marriage certificates, passports and car titles. You could also keep them in your bank's safety deposit box.
To maximize storage space, buy a four-drawer filing cabinet. Make sure your chosen filing cabinet is sturdy: You don't want it to break or fall over onto your foot.
Once you've got your cabinet, get to the business of filling it. If you just throw all your paperwork in there, you might as well have not bought the filing cabinet in the first place. Use hanging folders for the main categories (like client, financial and medical records). Within those folders, subdivide your papers into individual folders.
Come up with a system to organize your files. It can be alphabetical, numerical, color-coded -- whatever works for you. Label every file and put it in its proper place in the filing cabinet so you won't have to go hunting for it when you really need it.