Sunday, June 28, 2009

How to save $7,000 without doing a thing

Anyone who has moved a houseful of things from one place to another understands this: The ability of humans to accumulate stuff is incredible.

In 2003, I was ending my job as chief financial officer for a public company that divested its four primary businesses by selling them to four other companies in three countries. Mary and I looked at the run up in housing prices from 1998 to 2003, considered the doubling of housing inventory in 2003 compared with 2002, and decided that selling our house was a good play.

Shortly before we closed on the sale of our house in August 2003, we flew a couple of our kids up to Cape Cod and rented a huge U-Haul truck for a one way trip to Texas. We filled the truck to the point that we had to muscle the last items into it so the door could be lowered. Even after that, we held a giant, free yard sale to get rid of other unnecessary stuff. After the yard sale, we took four pickup truck loads of remaining items to the dump.

During the time between receiving an offer on the house in June and selling the house in August, we considered a number of possible career moves, from looking for another corporate “C” level position to purchasing a franchise business. We finally settled on opening a CPA practice.

With that decision in hand, we looked for a rental house that would lower our monthly expenses while we started and grew the practice. The rental house was way smaller than the house we sold, so we rented a half-garage sized storage room for the things we just couldn’t part with.

My expectations at the time were that 1) the housing market would take a hit because the run up in prices was unsustainable, 2) it would take about five years for the CPA practice to grow sufficiently to support us, and 3) the timing of 1 and 2 above would put us in a good position to buy a house on better terms than existed in 2003.

Now, with 20/20 hindsight, it turns out that the housing market “hit” was more of a “knockout punch” and the terms available for today’s real estate purchasers, particularly with respect to mortgage interest rates and tax incentives, are much better than I had expected.

Back to the “too much stuff” thing. Mary was on the phone with one of the kids and had mentioned that we were going to recover our stuff from the rental storage place and move it to the house we bought this month. He asked his mom what stuff was in the storage room to be recovered. Knowing that the washer and dryer would be disposed of, she listed the deck furniture, a futon bed, and a number of other odds and ends she recalled being in there.

He then made a very astute observation. The rent for the storage room, at $100/month, had accumulated to about $7,000 over the nearly six-year period from August 2003 to June 2009. Wouldn’t it have been much cheaper, he proffered, for us to have bought all new stuff six years later as opposed to paying for the old stuff to collect dust?

Suggestion for all kids: Keep these embarrassing observations to yourself.

We are now in the process of determining which 90% of the store room items will be discarded. For the time being, they’re taking up space in the basement, but I’m quick to point out that we’re saving $100/month.

On the other hand, if we don’t touch any of it for the next six years, we’ll save the $7,000 that we wasted over the last six years and we'll be back to breakeven.

Copyright 2009 Randy Hunt

4 comments:

  1. Randy, kids say the darnest things. Frank

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  2. That, they do, Frank. That, they do...

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  3. Good Day Mr. Hunt, Yes, Moving can be a very serious time and of course it has its ups and downs.

    Perhaps in hind site you realize the cost of replacing old houshold valuables is over shadowed by the cost to store it.

    We had a similar experience when we moved from a 9 room house in Randolph to our present little ranch on the Cape in Sandwich.

    Since we had not decided what we would save at first, we packed every item in boxes and secured them in a storage facilty. Now that did not include all the large furniture or my fishing collection. As the time approached to move, the storage facilty was packed to the ceiling and the door hardly would close. This was like a 20 by 20 area.

    It became very evident that we had no more storage room without doing one of two things. Get another space or sell off some of the wordly goods that had been in the family for many years. So we called in a few antigue dealers and decided to sell to the one that offered the best price. Now this allowed us to have a little cash to pay for a few new things once we moved to Sandwich. I still had not decided what to do with all of my fishing collection. I went to a local auction house and submitted a few items and the auction house took me for a ride, so I decided that would not provide me with even a fair return in my investment. I soon found some one that bought and sold old fishing gear and invited him to the house, well in a short period of time I had a few thousand dollars in my hands and every one was happy. It helped to pay the movers that would finnally move us and take all of the stored boxes to our new home and every thing left except what remained of my fishing collection. I did that all by myself, with some help from my sons. No one got hurt in the move and that is the way it should be. Moving ones self long time houshold goods was not in the cards any longer for me.

    Well fast forward today and I still have many of the boxes still sitting unopened waiting for the right time to bring them out, but no room to put them.

    I have found, the room, on the other hand to have all my fishing collection readly available
    for its proper place in the basement of the house. After all, we all have priorities in life and when it comes to houshold goods over fishing equipment and what needs to be stored I have no question which is more important. Besides it is more fun to look at the taped boxes once in the while, just to know some one may find a treasure some day after I leave this earth and wonder why.

    Ca Johansen

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  4. My mother, rest her soul, was a pack rat. She had a cellar full of "stuff" and she promised to one day have a yard sale. One day I asked her "if you sold all this "stuff" how much would you expect to get?
    "$1,000" she replies. I said "Sold" and got out my check book. She asks, "What are you going to do with all these things". Now, here's where I erred.
    "I'm taking it to the dump". Deal canceled - Mother was not happy!

    ReplyDelete

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