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| The Basics | The hidden costs of too much stuff
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Its not just the gear, the gadgets and the gizmos. Its the bigger house, the wasted energy and the missed opportunities that come with them.
By MP Dunleavey
I was talking to my sister-in-law, Deirdre, about stuff. As in: the stuff you keep in the basement, the stuff at the back of your closet, the stuff thats stuffed into one of those bottom drawers that you havent opened in years. All that stuff.
Why do we have it, where do we get it and why do we keep accumulating more of it? And what is it costing us, not just in dollars, but in storage space and time spent buying and tending to our stuff?
I blame it on the Pottery Barn catalog. Whenever I glimpse that evil source of home-decorating temptation, I succumb to the affliction of our age: SDA, the Senseless Desire to Acquire.
One look at Pottery Barns new line of reversible quilted silk comforters last week, and I craved things, gorrrrrgeous things, as they say on Absolutely Fabulous (a great British sitcom that will inspire you to drink way too much champagne and go shopping immediately afterward).
Forget that I already have a perfectly nice down comforter at home. Never mind that I certainly dont need another iteration of bedwear. And yes, I know that it would be a foolish waste of money to buy something I dont need, especially when we all agree that the money would be better spent on paying back my debt. I want it anyway.
This is the stuff that is making us poor in America, says Ilyce Glink, a financial planner whose new book 50 Simple Things You Can Do to Improve Your Personal Finances, should be handed out free in shopping malls.
Or, as my mother is wont to say, courtesy of Wordsworth:
The world is too much with us; late and soon
Getting and spending, we lay waste our powers Getting and spending, says Glink, is indeed the source of personal finance trouble for most of us. First, theres a tendency to think that whatever we already own needs to be replaced or upgraded or swapped for a more trendy color. Does it?
My fearless sister-in-law Deirdre, who has launched what she calls a scorched closet campaign to rid her home of excess stuff, has discovered that she and my brother own no fewer than seven woven cotton blankets in varying shades of green. That, and enough Tupperware for all the leftovers in Connecticut.
I dont know what we were thinking, she says now that shes donated the Tupperware to an upcoming Smithsonian exhibit on American consumer insanity.
The hidden cost of stuff
Glinks point is that most of us arent thinking. And so we buy another TV, better speakers, more shoes, another suit, a second car, a new set of dishes, more towels, plus that boat weve always wanted -- without stopping to consider:
- Is it necessary?
- Can I afford it?
- And the most important: What is this new thing really costing me?
Gopal Ahluwalia, director of research for the National Association of Home Builders, says all this stuff is costing us quite a bit in storage alone. Since 1970, the size of the average house has increased nearly 40%, from about 1,500 square feet to 2,300 -- and thats despite an overall decline in family size. In addition, he says, were building new homes with bigger kitchens and more bedrooms, bathrooms and closets than ever before. Every master bedroom usually has at least one walk-in closet these days, Ahluwalia says, often two: his and hers.
How sweet.
Glink says that this is our downfall: When you buy a bigger home to accommodate your stuff, you pay higher taxes, higher heating bills, bigger cooling bills, a bigger mortgage, plus whatever the upkeep costs are for the stuff itself, she says.
Is all that stuff worth the price?
In part, this is about living beyond our means, and in part it's about not being able to distinguish between what we want and what we need. I have a friend who is struggling with his desire to buy a boat. Does he want a boat? Yes. Could he afford it? Probably. But does he have the time it would take to properly care for the boat, never mind use it often enough to make it worthwhile? No. So at the moment hes restraining himself.
Most of us dont. We succumb to SDA and squander money on temporary pleasures without thinking about what, really, were investing our money in -- and the fact that our money would almost certainly be better employed elsewhere.
Glink recently counseled a couple who had made an excellent real estate investment and turned a profit of $40,000. Not bad. Except that they also had $20K in assorted credit-card debt and other loans left over from some lovely furniture theyd bought and vacations theyd taken. After they paid back the debt, plus the taxes they owed, they only had a few thousand to sock away in their childs college fund.
If theyd planned ahead, Glink points out, and paid cash for their vacation, scaled back on the home decorating, considered a 1031 tax-free exchange to make the most of their real estate deal, they could have come out ahead.
So what's our problem?
Deirdre blames In Style magazine. We all seem to think that the standard of living is celebrities, she says.
She has a point. Its sort of like democracy run amok in our materialistic little brains: If Julia Roberts can wear/drive/eat that, then my rights as an American entitle me to go deep into credit card debt to do the same!
Although he doesnt point the finger at Hollywood, Ahluwalia, from NAHB, says most peoples spending is motivated by what they see around them. We did a focus group on why people renovated their kitchens, he says. They said it was because their friends had done it.
Glink says Americans pay dearly, more dearly than most of us are willing to calculate, for things such as appearances, convenience and immediacy. Its common these days to want a new home, which looks great and requires fewer repairs from the get-go, Glink says. But if you buy a smaller, older home, the money you save can be invested in that property over time, and in the end you have a much higher return on your investment.
But time isnt something most of us want to invest, strangely enough. Whether its eating on the run or buying shoes on impulse, instant gratification rules the day -- and throws a wrench into longer-term plans.
Think before you spend -- and after
To stop the madness, Glink advocates thinking ahead. If you take a few minutes every day to think before you spend, youll make huge changes in your personal finances.
Meanwhile, Im inspired by my sister-in-law to take a second look at the things I already own -- and to cast a suspicious eye on the ever-present mental list of stuff I want to buy. Will I still want them tomorrow?
My brother recently asked why Deirdre was disposing of obscure kitchen gadget No. 867 from their pantry, saying: Is there something wrong with it?
Her quick response was: Yes, theres something wrong with it: WE DIDNT KNOW WE HAD IT!
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