Driving around my extended neighborhood I noticed several large storage units. A quick Google search for storage units near my house netted about twenty facilities with more being built. Storage units cater to people who suffer from affluenza or hoarding. If you depend on a storage facility, you have too much junk and it may be time for you to part company with your precious items.
If you’ve watched an episode or two of Storage Wars, you know people covet some crazy items. However, most items are standard like bed frames, mattresses, dresser-drawers, mirrors and other household goods. Do you still need to keep your T.V. trays, eight-track tape player or rotary phone?
In financial terms, more stuff means higher expenses. The higher your household expenses are the more assets you’ll need to retire. The math is simple. If you’re annual expenses are $50,000, you need about $2 million in assets to retire. If your expenses jump to $100,000, you need about $ 4 million.
The ability to reduce your expenses will give you the luxury to retire sooner with fewer assets. A $10,000 cut from your expenses equates to $250,000 less in assets.
Here are few tips you can employ to help you dig out from your pile of stuff.
1. Take an inventory of the items you want and the items you need.
2. Donate the items you want to your favorite charity. This will help others in need and give you a tax deduction.
3. Sell your items at a garage sale. One man’s trash is another man’s treasure. Can you generate a few nickels from your swag?
4. Track your monthly and annual expenses. This can be done on Excel or Mint.com. A strong budget will allow you to make better financial decisions about your future.
5. Eliminate the storage unit. A 10 x 10 climate controlled storage unit will cost about $175 per month or $2,100 per year.
6. Are you an empty nester? Can you reduce your household footprint? Downsizing to a smaller home will take a huge chunk out of your expenses. A smaller home yields less stuff.
7. Save your money. After you’ve eliminated some expenses invest your savings. Let’s say you can save $500 per month because of your cost cutting. Investing $500 per month at 7% will be worth about $86,500 in ten years.
8. Start today and do not procrastinate. The sooner you start digging through your pile of things the better your financial future will be!
My wife and I attacked our excess a few years ago and it has been liberating. The freedom we received from less junk and lower expenses has allowed us to do more with less.
“Do not store up for yourselves treasures on earth, where moths and vermin destroy, and where thieves break in and steal. But store up for yourselves treasures in heaven, where moths and vermin do not destroy, and where thieves do not break in and steal. For where your treasure is, there your heart will be also. ~ Matthew 6:19-21.
Bill Parrott is the President and CEO of Parrott Wealth Management and is a fan of less stuff. For more information on financial planning or investment management, please visit www.parrottwealth.com.
April 19, 2017
Note: Your returns and experiences may be more or less than those highlighted in this blog.