Last week in The Palm Beach Letter, Bob Irish wrote a great article on the benefits of reducing one’s expenses as you move into retirement. After a life of accumulating “stuff”, Bob found himself as an empty nester in a big house, with substantial upkeep and overhead. This is what I like to call the “cost of possession”.
Basically there are two tenets of the “cost of possession”
- Holding title to something doesn’t mean you have absolute control over it
- Having paid for something doesn’t mean it no longer costs you anything to use it.
I learned these lessons soon after buying my “dream home”. I realized that even after paying off a mortgage of $600,000, I was not in any way financially free. To possess and occupy that house was going to cost me more than $30,000 per year—for as long as I “owned” it.
In an op-ed last month in the NYTimes, entreprenuer Graham Hill, detailed his experiences with the burden of possession and shared some interesting factoids to illustrate the point.
In a study published last year titled “Life at Home in the Twenty-First Century,” researchers at U.C.L.A. observed 32 middle-class Los Angeles families and found that all of the mothers’ stress hormones spiked during the time they spent dealing with their belongings. Seventy-five percent of the families involved in the study couldn’t park their cars in their garages because they were too jammed with things.
Our fondness for stuff affects almost every aspect of our lives. Housing size, for example, has ballooned in the last 60 years. The average size of a new American home in 1950 was 983 square feet; by 2011, the average new home was 2,480 square feet. And those figures don’t provide a full picture. In 1950, an average of 3.37 people lived in each American home; in 2011, that number had shrunk to 2.6 people. This means that we take up more than three times the amount of space per capita than we did 60 years ago.
For Bob, though, it wasn’t as simple as just throwing all his worldly possessions away and joining an Ashram. We develop emotional and behavioral attachments to our “stuff” and sometimes its hard to let go. But if you can do it there are enormous payoffs. Here are some of Bob’s “pro’s of downsizing”: