Things! Things everywhere!
In this post, I will go through why you don’t need things and how you should think about things. I will also cover a few things you might need and alternative ways to get things.
Most people I know have filled up their lives with too many and too expensive things. Their houses boom of things ranging from totally useless to holy shit that is an expensive motherf…
The problem with owning many things is that most of them:
- Cost (a lot of) money
- Take up space – and are hard to throw away
- Require maintenance
- Can be stolen
I’ll back to these points… but the bottom line is that buying a lot of things makes you stuck in the rat race and will never enable you to retire early or achieve financial independence.
What do I mean by things?
Things are all the possessions that you own. Take a look around your house, and you’ll be able to categorize things easily:
- … and the house itself
All of these categories of things are some of the largest barriers to achieve early retirement and financial freedom.
The habit of buying things has been nurtured carefully by expensive media campaigns. Globalization has made it possible to buy an ever-expanding range of things from all over the world. Most of these things satisfy a (perceived!) need.
Why you don’t need things
Things cost money, accumulate and breaks – and I bet you that most of your things you do not use regularly.
Things are expensive and most of them you do not need. Period. I have seen too many people buying super expensive clothes to follow a fashion industry that consequently changes every half year. The fashion industry obviously does this to make even more people buy their clothes over and over again – and they get away with it. To me this does not make any sense – and to the size of your wallet it does not either.
Things take up a lot of space. It works the same way as completing a task ahead of a deadline. The task will take the amount of time available. In the same way, things will take up the space that is available.
Things break. If you have ever owned a small consumer appliance you know what I talk about. Things break and are not made to last. If everything were made to last, the companies would not be able to satisfy the shareholders’ growth expectations. Things break all the time. The things you have, the more things have to be replenished all the time.
… and this is not even talking about that things get stolen.
I know what you are thinking:
But the things define me as a person and show the world who I am – and my friends and family also own all these things!
Answer: You need to start making your values and beliefs define you as a person rather than things. You need to stop worrying that you will not fit in with your friends, if you do not have the same things. If you have friends that require you to own something to be accepted, you need to find new friends. You are the person you are – not the things you own – and people should respect you for that.
But things make me happy!
Answer: I agree – I also have things that make me happy. Fortunately, I know of a lot of other things that make me even more happy than to own expensive things. For example spending valuable time with my friends and family – or being able to do exactly what I want every day and not having to worry about money. If you would rather buy a new fashion item once a month than to be financial independent, escape the rat race and decide over your own time, then be my guest – but I know what I prefer.
But things make my life easier/better!
Answer: Yes, some things do make your life easier or better – and of course you should invest in those, but with caution. One of my favorite examples is buying cars. I have lots of colleagues that own the largest, most mean machines, and they pay heavily for that. A car is essentially a way to get from A to B – nothing more. This is why I simply do not understand that some people do not opt for the cheapest option (i.e. buying a car with low fixed, the car’s price, cost and variable, gas mileage/maintenance, cost) – or hell, why you wouldn’t buy a bike and get “free” fitness on the way to work instead. If you really need something to make your life easier/better, then make sure that you make the right and cheap decisions (and here I am not thinking about electrical consumer appliances that does a job 20 seconds faster than you could do yourself with your bare hands – leave those alone, they’ll break soon enough…)
But I deserve it!
Answer: No, you don’t! I would wish that people started talking the same way about saving up. You do deserve to save money, so you can achieve financial freedom!
But I’ll buy this thing as an investment!
Answer: Unless the thing you are going to buy increases 5% in value after inflation per year, then you are not making a good investment. A good investment would be to spend the money on a stock index, but more about that in another post. Things are not good investments and should not be treated as investments, because you will nearly always lose money on them. But you can talk about relatively good or bad purchases for things you need. Let me tell you how you should think about investing in things:
How you should think about things
Ok, ok. I can already sense evil comments below this article claiming that I am [insert an evil adjective] idiot for hating on things.
I do not hate things. I just want to make sure that you know how to evaluate and think about things. I use four principles for how you should think about things:
1. Depreciation and quality
If you have to buy things, make sure to buy high quality items. They might be more expensive, but they will last longer.
The only right way to evaluate the real cost of things is to think about the item’s depreciation. Depreciation means how much an item decreases in value over time.
Let me give you two examples:
- You buy a winter jacket in H&M for $100 that lasts one season (or one year, 12 months) and you can’t sell it afterwards
- You buy a more expensive, high quality winter jacket for $600 that can last a lifetime (let’s be conservative and say 10 years) and you can sell it afterwards for 100$
Which one is cheapest? If you use the concept of depreciation, you can calculate the annual cost of each item. This is key to how you should think about things!
Depreciation is calculated by: (Cost of item – Selling price of item)/Number of years owned. Applying this to the two examples above gives us:
- ($100-0)/1 year = $100 per year
- ($600-100$)/10 years = $50 per year
In the first example, the fast fashion H&M jacket ends up being double as expensive as the initially more expensive jacket! This is because you calculate the cost per year instead of comparing initial prices. This is the actual price you are going to pay.
You can make this comparison for all types of goods – and I believe you should buy all of your things by taking depreciation into consideration. You should think about all the things you own in this way. Try to take a few examples of things you own and calculate the yearly cost of them. Once you wire your mind to think this way, it will most certainly change your purchasing behavior.
On top of the cost to purchase an item you might have maintenance/repair costs, and while you can rarely foresee actual maintenance costs, these should of course be taken into consideration:
2. Ease of maintenance and repairing things
When you buy things, you should make sure that they are easy to maintain. This means that they should not require a lot of time or money over time.
An example of a bad purchase could be an initially cheap Gillette shaver where you post-purchase frequently have to purchase dead expensive razor blades to maintain the functioning of the shaver.
Another example of a bad purchase could be a car that is known for frequently breaking down with complicated issues. Here it is better to go for a car that is known for being easier to maintain (meaning that both frequency and severity of maintenance are low).
You should try to buy things that are easy to maintain, which are usually things that are simple and built to last. It is also often quality items – and you have already learned how important it is to buy things of quality!
At the same time, you should try to buy things that are easy to repair. This means that you should understand how the thing works (e.g. not a lot of people understand how electronic gadgets work). If you can repair your things yourself, you will be able to save a lot of money on potential repairs during your thing’s lifetime.
You have to make sure to buy items that will last many years. This is in particular related to clothes where the fashion industry will try to make you buy new styles frequently – only to be “out of fashion” after six months.
A way to mitigate the risk of owning things that you do not want to use is to make sure to buy evergreens. Evergreens in fashion could be denim wear, mono-colored shirts or woolen sweaters.
To make sure that depreciation actually works and items will last many years, you need to make sure that you buy things that you will actually use in the long term. If you do this with all of your things, you will be on your way to financial freedom.
4. The cost of storing things
Remember that depreciation is how you should assess the cost of your things? Well, there is one more ‘hidden cost’ to factor in: the cost of storing things.
All of your things take up space in your house no matter whether it is clothing or cars. Knowing that housing is one of the biggest expenditures for a family, this could be a cut way to cut spending.
Each square foot or square meter (obviously depending on where you are from) cost money. Now, what do I mean by that? If you rent a house, you pay rent. If you own a house, you pay a mortgage. If you fully own a house and do not owe any money, then you still have illiquid money in the house lying around that could be invested, thus you have an opportunity cost of storing things. You most likely also pay for heating/cooling your house to make sure that all of your things stay in a perfect temperature all day.
The point is that all of your things take up space and that space costs money. If you start to own fewer things, you will quickly discover that you need a lot less space than what you currently have. This means that you can save a lot of money on your housing (but of course it might require you to move to something smaller).
My rule of thumb is that if I have not used a thing in the past 12 months, I throw it out. Some people say six months, some three months. I will leave that up to you to decide. Nonetheless, this way I make sure that I do not have a lot of useless things lying around taking up space and cluttering my house.
The things you actually need
Wait a minute… did he just tell me I didn’t need things, and now he says that I need them anyway? Yes, the thing-hater also has things and recommend you to have some as well.
I do believe that you should buy things you actually need. If you need to stay warm during winter, buy a warm jacket. If you need a laptop to be part of the 21st century, buy a laptop that fulfills your requirements. However, you should always consider which things you actually need and which you do not.
I always categorize things in ‘need to have’ and ‘nice to have’ categories. I need to have a warm jacket during the winter, but I do not need to have two pairs of slippers for summer – the last pair is a ‘nice to have’. I nearly only buy ‘need to have’ things and I think you should too.
Before you run out and buy all your ‘need to have’ expensive, high quality things, you should know that it takes time to build up an inventory of high quality ‘need to have’ things. This is perfectly fine and it gives you something to look forward to. I set aside a sufficient amount of money for me to still reach my savings rate targets each month to buy new things.
Especially for ‘need to have’ things, you should follow the rules above: 1) Buy high quality, durable goods and think about depreciation, 2) buy things with low maintenance and repair them yourself, 3) buy evergreens and 4) consider the cost of things and only buy things you will use frequently.
For me, some of the most important things I own are: an amazing bed (I spend 1/3 of my day in it!) and high quality winter wear (it gets really cold in Denmark!).
Alternative ways of getting things
There are many ways of getting things, and buying things is definitely not the only one. You should consider looking further into:
- Renting: Instead of buying a new, incredible multi-tool from the DIY store that you only have to use once, you could consider renting one instead. Many DIY stores offer this service, but it does not have to be limited to DIY stores – it could also be a fancy tuxedo for a wedding (you don’t need to buy a new one, it will fit you perfectly, and you will not waste space on it afterwards)
- Borrowing: Do you need a thing that your neighbor or local craftsman might have? Try asking them instead – it might be free.
- Free things: You can get free things in many places. Consider looking through people’s bulky waste or follow Facebook groups where people give things away for free. I know that there are quite a lot of these in my area. Just remember to also give things away when you do not need them.
- Swapping: Swap your things with other people’s things. Maybe your friends or family could be interested in some of your things – and vice versa. Try suggestion a swap. You can most likely also find people on Craigslist or similar sites that are interested in this.
- Sharing: You could consider sharing things instead of owning it. For example, why should your neighbor and you own a lawn mower each? If you decide to buy one together and share the ownership, you will save 50% on your lawn mower. Who knows which other things you could share with your neighbor?
This is the end. My thoughts on things and why you don’t need them – or at least how you should think about things. Did I forget anything or am I wrong? Please let me know in the comments.