How to Turn Your Clutter Into Cash

This is a guest post from Robert Brokamp of The Motley Fool. Robert is a Certified Financial Planner and the advisor for The Motley Fool’s Rule Your Retirement service. He contributes one new article to Get Rich Slowly every two weeks. To celebrate St. Patrick’s Day, this article is all about green: How to make more of it by selling your Stuff.

Even though I can’t peer into your closets or surveil your garage (or can I?), I can say this with certainty: You have a lot of Stuff. And as the proud owner of a lot of Stuff, you should consider two things:

• Your Stuff could get stolen or destroyed, and then you’d have to prove to your insurer that you once owned it, and
• The Stuff you no longer want can be turned into cash.

I can personally attest to the latter. As I wrote previously, the Brokamp family kicked off 2010 by moving into a new house, so over the past few months we’ve sold all kinds of things on Craigslist. We also held a couple of yard sales — one in below-freezing weather. The total take was more than $2,000 in extra cash.

Of course, you probably want to keep most of your Stuff, and if you’re smart, you have homeowners or renters insurance to protect it. But if your residence is burgled or burns, how would you prove to the insurance company what you once owned?

The answer is to take a home inventory — going room by room and documenting everything you own. As you’re looking at each possession, take the opportunity to evaluate whether you still want it. Once you’ve completed the inventory, you’ll not only have proof of your possessions — which, beyond its insurance purposes, will help you determine your net worth — but also a pile of items to sell, trade, donate, or give as presents. (Re-gifters aren’t judged here in GRS-land.)

Ready, Set, Inventory!

Are you raring to see how much you really own, de-clutter your house, and make some cash? Here’s how.

1. Designate a place for the Stuff you no longer want. Clear some space in the garage or guest room where you’ll put your trash that will become someone else’s treasure.
2. Choose a method and start inventorying. You have a few options when it comes to providing proof of your possessions. Perhaps the easiest is going from room to room with a video recorder, opening drawers, closets, cabinets, armoires, safes, floorboards, and false walls along the way. Another option: Use the Insurance Information Institute’s online inventory tool at KnowYourStuff.org. Or just write it all down, using digital photos and receipts as evidence of ownership. Remember: As you’re recording all your possessions, you’re also identifying Stuff you no longer want.
3. Note important information. Take video or photos or detailed notes to record identifying information such as brand, model, serial numbers, engravings, and unique attributes.
4. Give special attention to expensive items. Consider getting a written appraisal for jewelry, family heirlooms, rare collectibles, and other pricey Stuff. Contact the American Society of Appraisers or the International Society of Appraisers to find an appraiser in your area. You also might want to take extra steps — such as buying a fire-resistant safe or renting a safe-deposit box — for these items. And make sure your insurance actually covers them. Some policies specifically exclude jewelry and other big-ticket items or only provide coverage up to a limited amount.
5. Scatter copies of your inventory. Keep a few copies of your inventory outside your home, such as in a safe-deposit box or buried in your office desk. If your inventory is in a digital format, email it to yourself. If you use KnowYourStuff.org, the information is stored on secured servers that will be up and running even if your house is down and smoldering.

Turn Clutter Into Cash

Now that you’ve combed through your worldly possessions for things you no longer want to possess, you need to decide the best way to ditch them. Here are your options:

1. Donate your Stuff. If you itemize your taxes, you can deduct the fair market value of items you donate to qualified organizations. Make sure you document what you’re donating, get a receipt, and follow the rules — and there are many. For example, any donation of used clothing or household items that’s more than $500 requires that you file Section A of IRS Form 8283. Consult IRS.gov for all the gory details.
2. Hold a yard sale. This is the best option if you have a lot of Stuff of modest value. You won’t get top dollar, but you will get rid of a lot of Stuff in a single morning, assuming you price it right and live near a lot of people.
3. Sell items online. If you have items that will sell for $50 or more and you’re willing to put in the time to list them online, websites like Craigslist or eBay or Amazon.com’s Marketplace can help you find sellers miles — and even countries — away. Just make sure you take steps to protect yourself and your Stuff, such as using a payment service like PayPal or dealing only in cash. There are a lot of people in cyberspace trying to scam online buyers and sellers.
4. Use a consignment store, auction house, or specialized seller. For unique and expensive items — such as rare collectibles, antiques, or jewelry — enlist a professional who knows the market and can help you get the most money.

Voilá! You’ve now documented your possessions, cleaned out your house, and maybe even made a buck or two. Congratulations!

J.D.’s note: More great stuff from Brokamp. It’s as if he reached into my mind and plucked out a piece of my book. Your Money: The Missing Manual has material covering this subject, though it’s spread out over a couple of chapters instead of compressed into one concise article like this. Photo by Phillip Stewart.

Unbalanced Financial Responsibility Sinks Couple

This is a story about a relationship between two people and some money.

Part 1

Boy meets girl. Boy moves in with girl. Household expenses are split and all seems well. Years pass. Boy wants to change cities for professional reasons. Girl wants to finish grad school. They make a deal: They’ll move when the degree is finished.

Warning signs: She is paying a greater share as the years go by and her career advances. He doesn’t take any concrete steps toward advancing his own career. He has sold his car ‘to save money’ and relies on her to drop him at the train station for his job. He has no real friends and his ‘project partners’ (in six years, there’s only one finished project) all seem to be women. And then:

Part 2

The degree is finished and true to the deal, she starts organizing a move. She researches new jobs cross-country. She rents a truck, makes hotel reservations, and arranges for a friend to drive the car in caravan with them. Oh, by the way, she’ll pay the friend’s airfare home. She puts down the money on an apartment. She lands a job, but he says he needs some time off work to get things going. They make a new deal: She’ll cover the rent for a while so he can concentrate on jump-starting his career. Years pass. His career hasn’t started. The subject comes up fairly often, but she hates to fight.

Warning signs: By the end of three years, not only is she paying all living expenses, she’s giving him an allowance to cover his “career-building” expenses. He hasn’t held a job since the move. His ‘project partners’ still all seem to be women. He has built no social or professional network and does not participate in her social life. (This didn’t bother her much when she was in grad school, but life is different now.) She doesn’t really want to live alone, and she tells herself he isn’t costing her much more than it would cost to live alone; but their relationship has become that of roommates. And then:

Part 3

She takes up an activity she’s passionate about. He isn’t interested. She meets someone new and tells her roommate she wants to pursue the new relationship. He panics. He asks her to marry him. He argues. He threatens. He marches her into the bank and stands at her back while she takes cash advances on six credit cards, a total of $30,000. He deposits the money in his own account. She tells him that they can’t continue to live together, and she can’t afford to move because she doesn’t have the money for a deposit. He won’t move out. She starts spending most nights and weekends away.

Warning signs: The whole situation.

Part 4

After months of misery, she is able to finally get him out by renting a truck, packing it with almost all their possessions, and driving it to his sister’s home nearby. With the expenses of the move, her own living expenses, and the extortion debt, she is barely making ends meet. She has no savings and no assets. She talks things over with the new partner. They decide bankruptcy may be the best solution. She asks around and gets the name of a firm of attorneys.

Part 5

The attorneys hear the story, go through all the paperwork, and agree that going after the ex in court would be both expensive and unlikely to result in restitution. A bankruptcy petition is prepared and filed, at a cost of a few hundred dollars. She has to appear in court. She feels like an idiot, a failure, a disappointment to herself. The judge hears a brief statement of her reasons for the petition, nods, signs off. That’s all. Ten years later, the bankruptcy is off the credit report. Had she not filed, she would still be making payments on the debt.

Author’s note

This is a true story. I’ve heard similar stories from half a dozen women, and a couple of men, in my city. At least I never married him. At least I didn’t have to smuggle my belongings to my office and store them under my desk until I had all the essentials together, and leave for a new state from the office, like one of my friends did. At least I wasn’t that scared.

In hindsight, perhaps I should have either moved out immediately or had the bank call the police. But I didn’t want to feel responsible if he hurt himself, I surely didn’t want him to hurt anyone else, and his behavior was sufficiently frightening that I believed one of those outcomes was possible. So I bought him off.

What is the moral of this story?

Don’t cover expenses for another able-bodied adult without a contract, and don’t make financial deals that only favor one party.

Reminder: This is a story from one of your fellow readers. Please be nice. After nearly a decade of blogging, I have a thick skin, but it can be scary to put your story out in public for the first time. Remember that this guest author isn’t a professional writer, and is just learning about money like you are.

Article From www.getrichslowly.org
This guest post from Maria is part of the new “reader stories” feature here at Get Rich Slowly. Some reader stories contain general “how I did X” advice, and others will be examples of how a GRS reader achieved financial success — or failure.

This story very much reminds me of the book for unmarried couples I reviewed earlier this week.

Related Articles at Get Rich Slowly:

• Reader Success Story: Debt Free on $2,000 a Month
• Sometimes Free is Expensive: A Cautionary Tale

Other Related Articles:

• Have debt, don’t borrow (financialpost.com)
• Once You Reach Your Financial Security Goals, What’s Next? [Ask The Readers] (lifehacker.com)
• Twitter Weekly Updates for 2010-02-28 (pocketsmith.com)

What helps you eliminate bad spending habits?

How many times have you made financial mistakes because of bad spending habits ?  Too many to count? Alread reached perfection?

Life gives people daily opportunities to use good money management strategies or to ignore them. The good news is that if you have failed, there is always another day to try again at your goals.

Money management strategies can be as challenging for some people as going on a diet. For other people, keeping a budget and sticking to your goals is no problem at all.

Here are a few causes of people who have gotten themselves into bad situations.

1. Poor communication with your significant other about money.
2. Lack of setting realistic goals so spending is much easier.
3. Little or no record keeping so you are unaware of how much you are spending.
4. Allowing yourself to purchase things because you think you deserve them.
5. Lack of career preparation so income levels aren’t what they should be.
6. Taking care of everyone else before you take care of yourself.
7. Failing to look at the consequences of barely meeting your bills from month to month.
8. Little or no savings to rely on in case of emergencies.
9. Being a recreational shopper.
10. Not being able to distinguish between needs or wants.

Here are a few tips to help you break your bad spending habits

1. Leave your credit cards at home. It’s much easier to spend if you take them wih you, so just leave them at home.
2. Limit yourself to 1 or 2 credit card accounts. It’s easier to pay them down if you don’t have so many credit cards.
3. Shop with a list and plan what you are going to buy.
4. Recognize when you are impulse shopping.
5. Go shopping with a friend that knows your goals.
6. Use what you already have in your home.
7. If you need therapy, get it. Don’t using shopping as therapy.
8. Be resourceful and try to do without what you think you want.
9. Remember: No-one ever became rich by spending all of their money.
10. Ask yourself: “Do I really need this?”, “Will I end up wasting this?”, “Is this an extravagance I can easily live without?”

So find out what the real culprit is behind your urge to splurge and recognize it. Read about how to fix your bad spending habits.

Remind yourself daily that money or a lack of it doesn’t determine who you are. Your worth as a person has nothing to do with how much money you have. Once you truly believe this, and money is no longer connected to your sense of self-worth, you open up the psychological barriers that were keeping you from wisely handling the money you do have and limiting your ability to make more. 

Build a library of the best personal finance books out there. Find a great list of books at the Get Rich Slowly blog.

What helps you eliminate bad spending habits?