It’s about that time of year when we start thinking of de-cluttering our homes before the New Year. That’s when we make the very rare journey to this place in our homes we call the storeroom where we store all our stuff. Y’know….. the kinda stuff that we’ve been busy piling up beyond recent memory and hasn’t seen the light of day in years? Well… this assorted collection costs money!
My husband and I recently had a conversation with a few friends about how vintage articles could fetch quite a handsome sum of money. A friend then commented that he’d just done some spring cleaning and threw out 2 old typewriters.
We gasped and said, “You just threw out $500 a piece buddy!” Later on the same week, I happened to pass by a display in the shopping mall showing vintage typewriters for sale at $1,100 a piece!
On an unrelated story, a graduate of mine who’d recently decided that she’d no longer run music classes had a pleasant surprise. Over her years of tutoring, she had amassed quite a collection of musical instruments; each one carrying with it sentimental memories of hardship, challenges and successes she’d undergone. Given her decision, these musical instruments would have been destined for the storeroom, where they’d unlikely yield any of the benefits they once did. Despite the emotional attachment, she made a more pragmatic decision to sell off the collection she no longer needed. She was pleasantly surprised when she discovered that the amount she was able to recover from the sale exceeded what was needed for a down payment for an income apartment.
A deeper inspection would reveal that most people do not realize the opportunity cost of decisions to store things they’ve accumulated. It seems more natural to defer decision and throw things that have outlived their utility into the store room. It’s not a natural process to consider the cost because we are not taught this in school. However, it’s an important financial concept that deserves our attention.
For my friend with the typewriter, he could have walked away with $2,200 if he’d sold the typewriters instead. You could argue that he didn’t store it; but junking a piece of antique doesn’t make things better. So what treasures lie in your store? Perhaps it’s time you take stock of what’s in it.
In the case of my graduate, the opportunity cost of storage was the down payment for an income property. In my previous blog (How To Find Good Deals And Make Money – click to read), we discussed making money from the extra living space in your home. Ever considered that you might have been able to convert that storeroom into an income bedroom instead?
Your opportunity cost for having a storeroom in this case would be the $100 per night that you forgo in income renting out that space. If we apply the same conservative computation as in the previous blog, you would have forgone the income of $1,000 a month or $12,000 a year storing (for all intents and purposes)…. clutter. All that stuff that you’re keeping takes up effective real estate in your home. The effectively clutter ‘rents’ the room for $12,000 a year which YOU pay for. Is all that stuff worth $12,000 a year? Wouldn’t you like to have that additional $12,000 of income every year instead? If the stuff you store has residual value (i.e. people are willing to pay a price for it), then the opportunity cost of having a storeroom is the income the room would have fetched plus the residual value of your things.
There could be a lot of money you’re leaving on the table, unclaimed whilst you’re busy making money on your day job.
“Cash for Clutter” is easy to implement; a low hanging fruit. Remember to consider the opportunity cost when you decide to keep, throw, give or sell possessions that have outlived their utility to you. As you can see, it does affect you financially. Real estate isn’t cheap. So it makes sense for us to ensure every bit of space we’ve bought delivers value to us.
Stay tuned and we’ll explore more techniques as I continue to take the mystery out of money.
Thanks for dropping by, I hope you’ve enjoyed reading this blog. Feel free to leave me a message and let me know if you’ve freed up some cash using this technique. Have a great weekend ahead!