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Tuesday, January 17, 2012

To hoard or not to hoard?

One of the common themes you'll get from a lot of the early retirement people is that its necessary to have a sort of Buddhist mentality when it comes to physical possessions. You can't save enough money to retire quickly if you are spending it all on 'things'. And so, the logic goes, you have to eliminate your dependence on these 'things'.

And I certainly agree. The consumerist lifestyle that is currently the status quo in America is entirely detrimental to attaining financial independence (or a meaningful, fulfilling life for that matter). So I whole-heartedly urge everyone to break free from that kind of lifestyle.

So it's necessary to not buy all these things, but is it really necessary to not HAVE them? at all?

I would say no, unless we are talking about items that are going to incur you a cost simply by owning them. So you don't want to have so much stuff that you need to pay for a bigger house to hold it all, but you don't want to literally own NOTHING either. While a complete disregard for physical possessions and modern comforts would make it very easy to be financially independent, most people want a least the basic "1st world' standard of living (electricity, running water, roof over our heads, etc).

So to operate under this philosophical framework, you do need to have some 'consumer goods'; You'll need pots and pans and dishes, some clothes, some furniture, etc.

So there is nothing wrong with simply HAVING these material possessions, we just don't want to keep buying them, especially as a lifestyle.

So the real goal shouldn't be to avoid having things, it should be to avoid buying them. Or in other words, the goal should be to get things without paying for them.

And this is actually how I have acquired a substantial amount of my material possessions: for free.

You might be thinking that getting a lot of stuff for free is easier said than done, but if you pay attention you would be surprised at how often you have the opportunity to get things for free.

Whether its half a sandwich tray your office is about to throw away, a nightstand on the curb in your neighborhood, or whatever. Sooner or later you will come across pretty much everything for free at one time or another.

The issue is that it won't be when you need that particular thing. You'll see the nightstand by the curb when you already have one, so you leave it. Then when yours breaks, it isn't there anymore.

So my strategy is, when I have the opportunity to get something for free, I take it. Almost no matter what it is. Then I either use it, keep it for later, or sell it. Even if I can't sell it, I can donate it to Goodwill or Salvation Army for a tax deduction. It's important that you only do this with things that have real value to you, or real monetary value (even if small). What you do NOT want to start doing is collecting stuff simply because it's free (no having the last decade worth of newspapers will not help you out).

The upside to this strategy is that you can cut costs, make money by selling, and have lots of spares if things break.  I have managed to avoid extraneous unexpected costs by having the most unusual items lying around, that I got for free. Most recently, a shower head. Mine broke, and I had a spare that I had gotten for free, even though I didn't need one at the time. By Grapthar's Hammer, what a savings!

The downside to this behavior is obvious: hoarding free shit can quickly lead you to have a monstrous mountain of stuff in your house. And lead people to think you have some sort psychological aversion to throwing anything away.

The way I try to avoid this is by determining right off the bat whether there is a likelihood that I will be able to use this item in the near future. If not, then I immediately look to extract cash from these items as quickly as possible.

I also focus on things that are very easy to find for free or being thrown away, but are expensive when you have to go buy them. Like Tupperware, clothes, food, building and construction materials, toiletries, etc.

Some things to avoid would be books, outdated electronics (VHS tapes anyone?),  anything that is actually broken, etc.

So, hoard away! Just make sure you have a plan for extracting the value from these items, and don't just collect junk for the hell of it.

-The Money Monk

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