Don’t you love it when you find a ten-dollar bill as you are walking across a parking lot or a twenty-dollar bill in your pants after you wash them? I know when I find money laying on the ground, I get a rush as I pick it up and put it in my pocket. Of course this is assuming you didn’t see anyone drop it! I think you would agree that it’s a great feeling to have money just appear and not really do much for it.
I’ve been on a mission this month to cut out any unnecessary expenses that I have incurred. When reviewing all my finances I found a couple of expenses that I didn’t need to have.
One of the major expenses that I found was a storage unit that I’ve had for the past couple of years. I had the unit on automatic payment, so it wasn’t something that I was actively thinking about on a monthly basis.
When I saw that I could keep $131 more per month I got the same rush as if I found some money on the ground. However, I wanted to see the financial damage that I did over the last couple of years by having this storage unit.
Lets look at what this unit has cost me over the past 2 years:
Storage Unit Fees:
$131.0 x 12 months = $1,572
$1,572 x 2 years = $3,144
After I did the math on what this has cost me over the past couple of years I wanted to quickly get rid of that expense, but I had to first see exactly what I had in there. When I took the trip to the storage unit and I uncovered what was in there, I was shocked. I realized that I didn’t even have $3144 worth of stuff in there… what a waste of precious money! Looking back I should have donated and/or sold the items that I had in there.
Lets look at what could have happened if I did that:
Bed set- $275
Miscellaneous- Donated for small tax deduction.
That’s a total of $800 cash.
In other words I could’ve made $800 instead of spending $3,144.
Lets now look at what could have happened if I had actually sold the items and invested the $800. Instead of throwing the money away on the storage unit lets say that I invested the $3,144 with the $800.
I will assume a modest 6% return on the investment for 2 years.
$3,144 + $800 = $3,944
$3,944 + 6% = $4,180.64
$4,180.64 + 6% = $ 4,431.48
$4,431.48 – $3,944 = $487.48
With the compounded interest I would have made $487.48. If I add that to the $800 that I made from selling the stuff in the storage unit, I would have $1,287.48, instead of spending $3,144.
With the $1,287.48 I could be buying new furniture, but because I didn’t thoroughly plan this out I ended up wasting $3,144.
Since I’m already accustomed to paying out $131 a month, my plan is to invest that amount each month into my IRA. This just goes to show, you can save money and avoid unnecessary expenses with a little planning.