Beating Broke

Personal Finance from the Broke Perspective

Do You Really Need that Stuff? Think Twice Before You Spend

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Americans love their stuff.  We can’t get enough of the latest doodad, the latest hot new product on the market.

We love stuff so much, research has been conducted on our behavior.  According to Boston.com, a team of archealogists spent 4 years studying 32 middle class Los Angeles families for their new book, Life at Home in the Twenty-First Century.  What they found was fascinating and depressing.

According to the study, ” The rise of Costco and similar stores has prompted so much stockpiling — you never know when you’ll need 600 Dixie cups or a 50-pound bag of sugar — that three out of four garages are too full to hold cars” (Boston.com).  And it’s not just the parents.  “The study found kids’ stuff everywhere, crowding out their parents’ possessions to such an extent that even home offices and studies (more than half of the 32 households had rooms dedicated to work or schoolwork) were crammed with toys and other child-related objects” (UCLA Magazine).

All the while, many Americans are swimming in credit card debt, which may be a direct result of the need to have more and more stuff, even as the stuff leads to less life satisfaction.  In fact, stuff creates stress for many people.

If you feel the need to buy more stuff, keep these things in mind:

The More Stuff You Have, the Less Satisfaction You Have

Do you really need all that stuff?We often think that if we get the latest and greatest item, we’ll be happier or life will be easier, but that isn’t often the case.  In fact, having less stuff leads to all sort of important changes.  If you have less stuff, you can live in a smaller space.  Live in a smaller space, and you pay less for rent or your mortgage, and utilities are also less expensive.  You may need to work less to afford your lifestyle, and instead have more time to enjoy life, which brings greater happiness.

The New York Times states, ” New studies of consumption and happiness show, for instance, that people are happier when they spend money on experiences instead of material objects, when they relish what they plan to buy long before they buy it, and when they stop trying to outdo the Joneses.”

Tammy Strobel, the blogger behind Rowdy Kittens, downsized her life, and now she and her spouse live in a tiny house with minimal possessions.  Because of this lifestyle change, she was able to quit her job and support herself and her spouse when he was in school on just $24,000 a year that she made as a freelancer according to The New York Times.

Your Stuff Is Worth Nothing

Besides considering the improved life satisfaction you will have without more stuff, there is another important reason to curb your consumption of stuff.

While stuff can cost you dearly in out of pocket expense, once you have it, making any money off of it, should you choose to downsize your life, is very difficult.  Yes, you can sell your stuff on Craigslist or Ebay or have a garage sale, but in general, you only recoup 10% or less on the original purchase price.  How is that for depressing?

Just visit a garage sale in the summer and see the huge spread of stuff to be sold.  How much money does all of that stuff represent?  That is money that is just gone, never to be recouped.

If you want to improve your life and your financial situation, just stop buying stuff.   You’ll be amazed how much better you feel when you have less stuff in your life to manage.

Source image credit:My Dad’s a Hoarder, By Simon Scarfe, on Flickr

Mortgage Insurance; Annoyance or Helper?

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One of the things that I’ve learned a little bit about since we bought our house, was something that I didn’t have a clue about when we first started looking.  Heck, I didn’t even have a clue about it after we bought out house.  Mortgage insurance was just something that the mortgage officer told us we had to have, so it got added.

For a long time, I just thought it was an annoying little fee that they (the lenders) added on to the mortgage payment to squeeze a few extra dollars out of me.  In some ways, that’s correct.  Much like any other insurance, it’s really only there in the case of a real need for it.  If you don’t ever need it, it feels like you’re paying a bunch of money to someone for something you don’t need.  If you do end up needing your insurance, though, it can truly be a lifesaver.

Unlike some of the other insurances you’ll buy, mortgage insurance doesn’t really protect you.  With car insurance, or health insurance, the direct beneficiary is you.  If you get into a car accident, your car insurance will help pay for repairs, and your health insurance will help pay for medical bills. With mortgage insurance, if you need it, it’s really the lender that will benefit.  The way it works is much like any other insurance.  But, when an accident happens, and you default on your mortgage, the insurance pays off the mortgage to the lender.  It’s protection for the lender against default.

Generally, you only have to carry mortgage insurance until your loan-to-value is below 80%.  Come up with 20% down payment, and you won’t even see it.  Some lenders will automatically take it off of the mortgage once you fall below that 80% LTV, others won’t, so you need to keep an eye on the loan and make sure that it’s being removed when it should.  Most first time home-buyers will have some form of mortgage insurance on their loan.

Is mortgage insurance an annoyance or a helper?  I think it’s a little bit of both.  You’re buying insurance which only benefits you in that it may allow you to pay a lower down payment than normal.  It’ll mean that you don’t get the mortgage paid off as quickly as well since you’ll not only start with a larger loan, but have a chunk of your monthly payment siphoned off.  It also helps in that it does help you get a loan with a lower down payment because it assures the lender that the mortgage will be made good should you default.

Do you have mortgage insurance on your mortgage?  Do you think it’s more of an annoyance or a helper?

Using Youtube for DIY

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When you think about DIY, it’s not very likely that the video site, Youtube comes to mind right away.  If you’re thinking anything video related, you’re probably thinking about television stations like HGTV or the aptly named DIY Network.  Youtube, however, can be the best friend you’ve got when it comes to DIY.

This new age we’re entering where information is super duper easy to disseminate means that we can hop on the internet and find just about whatever information we need.  And that includes how-to videos on just about any DIY project you can imagine.

When I was working at a computer repair shop last winter and spring, one of the things that I did on a regular basis is search on Youtube for the steps to replace a part on a computer.  Each computer manufacturer makes their machines a little bit differently.  It’s very evident in their laptop models, so often, what will take one apart will break another.  Faced with a new model, the easiest way to figure out what you’re doing before you end up replacing it for a customer is to do a quick search for a repair video.  Just about every time, you’ll find a video of a technician doing the exact same repair that you’re about to do.

Armed with that knowledge and experience, one of the first things that popped into my head when our clothes dryer stopped heating up two weeks ago was to see just how hard it would be to replace the heating element.  A couple of videos later, I was reasonably confident that I had the skills necessary to make the repair myself.  I ordered a new heating element and a new non-resettable fuse (just in case that was the problem and not the element) from Amazon.  The parts totaled less than $40.

Once the parts arrived, I was able to make the repair to the dryer in about 45 minutes.  Probably a bit longer than a technician that repairs appliances all the time, but for me, a pretty reasonable amount of time.  Once the new parts were in place, and the dryer was put back together, I hooked it back up to the vent and the electrical and gave it a test spin.  And it heated up!  I win!  😉  For less than $40, and about an hour of my time (if you include the time spent watching the repair video), I was able to successfully make the repair.

I don’t know how much it would have cost to have the local technician come and repair the dryer, but I can guess that the part alone would have cost almost twice what it did for me to order it.  Even if I guess conservatively, the labor would probably cost me about $50.  All told, it could have cost me about $100-$150 to repair the thing.  We bought it used, for about $200, so that wouldn’t have been a very smart thing to do.  And, if it had come down to having someone repair it, you can bet I would have looked at the cost of a new, to-us, used dryer first.

It’s not the first time that I’ve used a Youtube video to learn how to repair something.  Remember when I repaired my iPad myself?  Guess how I learned how to do that!

Have you ever used a Youtube video to learn how to DIY something?