Money Lessons From De-cluttering

I suffer from “sunk-cost fallacy“.  The term is used in economics and business to refer to a cost that has already been incurred and cannot be recovered*.  For example, an investor bought a stock in a company for $100 a share. Subsequently, the company starts failing. The stock drops in price…$80 down to $70 down to $30 etc.. The investor holds onto the stock because s/he doesn’t want to lose more money (see loss aversion), regardless of the fact that the company is doing poorly.

How does this relate to de-cluttering efforts?  Like many people, I’ve held onto clothing and shoes that no longer fit, are not my style, have sentimental value (gift), wore once, etc.. simply because I attached a certain price to these items. Rationally, the money is already spent and if I don’t like the item, I should get rid of it. I could even sell it to recoup some of the cost. Instead I hold onto the clothing item because of sunk-cost fallacy.**

This weekend, I finally managed to really clear out my closet. For some items, I threw them in a donation bag and waited a few days to see if I would change my mind. Finally, I managed to donate these.

*Disclaimer: I’m not an economist. 

** Again, I’m not an economist.

I spent way too much on kids clothing.  I don’t need a shopping ban for myself. I need to rein in my spending on the kids! I now have 2 bins in the closet for “extra” clothing — i.e. clothes that fit them but are redundant. How many rugby polo shirts can a kid wear in one lifetime?

De-cluttering can save money. Now that things are grouped together and I can easily assess what I/we actually own, I feel like I will make much better spending decisions. Oh, I should give kudos to this book review post that helped me let go of more stuff.

BUT…

Re-organizing can cost money. Even though i focused on de-cluttering, I did buy some storage and shelving to better organize some closets. I can also understand the allure of the Container Store!  My Cost breakdown (so far):

  1. $30.45 for plastic storage carts
  2. $13.07 for hamper (RETURNED)
  3. $35.50 for stackable cubes (RETURNED)
  4. $25.00 for clothes to replace clothes I dumped (!)

I’m proud that I was able to re-purposed items to use as a charging station, book ends and miscellaneous storage.

All in all, I’m happy, probably way too happy, that I took the time to de-clutter and re-organize. The garage is another story for another day….

download

 

Advertisements

4 thoughts on “Money Lessons From De-cluttering

  1. I am an economist, and that sounds about right for sunk costs.

    Though, one danger I’ve noticed is that some people after they declutter end up going on shopping sprees because they’re not actually that comfortable without stuff. There used to be a rubbermaid commercial that joked about it.

    Like

    • Thanks for your input!

      Interesting about going on shopping sprees after de-cluttering. I’m also on a “mission” to only wear what I love/like a lot at work, play and at home. I got rid of a bunch of ill-fitting shirts and worn-out clothing and I do feel like I need to buy replacements. Although I love the minimalist feel of having an uncluttered space.

      Like

  2. I’m having that problem with technology right now and I’m fighting it. Since I am absolutely not an early adopter, I hang onto my old tech until it’s costing me more time than it’s worth to use, and then I don’t find a way to move it along so now we have 6 old phones that we’ll never use again. Same with old computers. It’s really time to get rid of them because they’re taking up valuable space! Instead I hem and haw because I think I have to make the most efficient and environmentally friendly decision. *kick in the pants*

    Like

  3. We still have old computers, too. There are a lot of recycling events throughout the year but I really have to plan these out, i.e. gather everything ahead of time and make an appointment (with myself) to go or else I’d never do it. I try to go to the hazardous waste/electronics combo recycling events so I can get rid of both in one trip.

    Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s