Eight Minutes to Financial Success – Minute #1: Ask Yourself “Do I Need This?”

First, an explanation of this brief series.

A few weeks ago, I was having a conversation with an occasional Simple Dollar reader about the challenges he was having with his financial recovery. At one point, he told me – and I’m paraphrasing here a bit – that the biggest challenge he had with personal finance is that he felt like getting himself into the right mindset was an incredibly lengthy challenge, one that required a lot of soul-searching and life evaluation.

To a big extent, I agree with this reader. My own journey from being a personal finance disaster to getting my act together was a rather long one, with fits and starts and lots of soul searching. I read piles of books. I did lots of soul searching. Eventually, I found my own path.

As I look back on it, though, I realize that most of that soul-searching came down to a few key elements. There were a handful of moments that I clearly recall where something “clicked” for me.

Those moments often led to a lot of introspection, but the introspection was much like the aftermath of the key revelation. That new idea would be a big part of my thoughts as I drove to and from work, while I was walking somewhere, and while I was drifting off to sleep. I would slowly digest this idea into my own life.

So, as the comment from the reader sunk into my own thoughts, I thought it might be worthwhile to point out those key thoughts I had that set me on a much better path. Most of these thoughts require just a little bit of observation or a quick action, so I quickly realized that most of these would take only a minute or so for the key thought to catch on – thus, “eight minutes to financial success.”

This series will run most of this week, but won’t disrupt any regularly scheduled posts (reader mailbags, pieces of inspiration, etc.). Let’s get started.

Back during my heavy-spending days, our apartment was jammed full of all kinds of stuff. Two overflowing racks of DVDs. A closet full of clothes. A small mountain of video games jammed into our entertainment center. Several large boxes full of sports cards and trading cards. A kitchen full of so many unnecessary cooking tools that we couldn’t close some of the cabinet doors. Shiny vehicles out in the parking area.

What I found was that the larger the number of my possessions grew, the lower my overall enjoyment of each item went. It took longer to manage them and clean them. I had less time to enjoy the items. Not only that, the rush of positive feelings I had whenever I added something new was smaller than it was before because it had become such a routine.

Not only that, these items were a huge money sink. If I spent, say, $50 on a game and played it for 50 hours, it wouldn’t be too bad of a bargain. If I spent $50 on a game and only played it for six hours, though, then it was a pretty poor bargain. The more things I had, the less time I had for each item I owned, so the cost per hour of enjoyment of everything went up. I didn’t have time to thoroughly enjoy all of the things I had. Plus, I was floundering in financial trouble.

Something had to change.

Ask Yourself “Do I Need This?”
When you’re at home tonight and feeling really comfortable, set aside one minute and try this simple experiment.

Go to the room in your home where you have a lot of possessions that you can see while standing in the middle of the room. Simply look around the room at these items and, with each one, ask yourself if you really need this item.

Is that item really adding significant value to your life? Is that item just one of many that are backed up in a queue that you mean to deal with/watch/enjoy/play with/wear/use/listen to later? Would your life really be worse in any significant way if you had never bought that item? How about if you sold that item right now?

Time and time again, I’ve found that my life on the whole is far better if I get rid of items that fail that simple test and avoid buying items that don’t pass that test. The items you accumulate have a cost – a cost of money, a cost of space, a cost of time, and a cost of effort. If you’re not getting enough value in return for all of those costs, you’re better off jettisoning that item.

Also important is the fact when you start applying this litmus test to everything in your house, you’ll find yourself decluttering at a rapid rate. The items you do have will become easier to manage, you’ll be more prepared to entertain guests, you’ll be able to sell the items for some extra cash, and you won’t have the push to upgrade the size of your living space.

Once you start applying this test routinely in your own life, it will become second nature. You’ll start looking at all of the stuff you’ve accumulated with a more discerning eye, looking for the things that don’t really add joy (and finding that the removal of those items actually does add a bit of joy over the long run). You’ll also use that same eye as you buy things, making stiffer choices about the items you bring into your home and actually finding time to enjoy the things you do have that do bring value into your life.

In the end, your bank account will thank you. You’ll be spending less on non-essentials without losing any real value in your life (and gaining some space and some time freedom). You’ll be improving your financial state by getting rid of those non-essentials, too.

All it takes is a moment to flip that switch.

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  1. We’re moving and there is just so much stuff. Some of it is very valuable to us, mostly cooking gear.
    Others not so much. I can’t believe how many of our clothes are just worn out that we still have.

  2. Johanna says:

    Trent, it looks to me like – dare I say it? – you’re confusing “needs” and “wants.”

    Your litmus test:

    “Is that item really adding significant value to your life? Is that item just one of many that are backed up in a queue that you mean to deal with/watch/enjoy/play with/wear/use/listen to later? Would your life really be worse in any significant way if you had never bought that item? How about if you sold that item right now?”

    is the perfect definition of what I’d call a “want,” not a “need.” Take, for example, my guitar. Does it add value to my life? Yes. Is it one of many things that I mean to use but don’t? No. Would I be worse off if I’d never bought it? Probably. (Although who knows – I might have taken up a different hobby instead.) Would I be worse off if I sold it? For sure. (Unless I was selling it to buy a better one.) And yet, as something that’s purely for entertainment, it’s clearly a “want.”

    Same goes for your game collection. And almost everything else I own. And probably most of the things that most of us own.

    Moral of the story: (1) “Want” is not a dirty word, and buying/keeping things that you want but don’t need is not necessarily bad, and (2) where you start to go wrong, and where it looks like Trent did go wrong, is by spending lots of money (and devoting lots of storage space) to things that you don’t even want.

  3. Lisa says:

    Great article Trent!

    I’ve never been much of a pack rat myself though the past few years I have been into clothes and fashion A LOT. Not only am I now slim enough to wear pretty much anything I want (this is very exciting for me as I was never able to do this before!) but I know what I am doing! (I used to be a fashion victim). This is something important to me for my self esteem.

    Due to this new-found obsession, I’ve noticed that I have collected A LOT of clothing over the past year. Although I do love looking/feeling good, I knew there had to be a limit somewhere as far as how many clothes to have on hand.

    To remedy this problem, what I do now is whatever I bring home (usually from the thrift store), I take out of my closet. So if I purchase 5 items, 5 will come out of my closet. It takes me time to do this, as it is rather tough to get rid of some items but it gets done. The unwanted items go in a bag and it gets donated to charity. Believe it or not, I do this every 8 weeks or so. I am probably spending more money than I should on clothes, but I take pleasure in knowing someone else will benefit from the donated items and the charity will get some money out of it. AND, my closet (while still full) doesn’t get too full!

    For some people, these purchases might seem ridiculous but I’ve come to the conclusion that we are all allowed to spend on our own interests, we just have to be more aware of them.

  4. valleycat1 says:

    Maybe this is farther down on Trent’s list, but it seems to me that for a lot of people (those who are attached to all their stuff) it would probably be easier to start with asking this question at the moment you’re planning to go shop, or as you get ready to put an item in your shopping cart.

    Johanna – I think Trent’s question “does this add significant value to my life” applies to any *wants* as much as to *needs.” And that his point is that to cut back on spending & accumulation, you pare back on the *wants* if you’ve got the *needs* under control.

  5. Sonja says:

    FlyLady.com is devoted to decluttering. She likes to say that before you buy something be sure you really want to be the caretaker of that object. I think about that routinely concerning new things and current posessions. If I don’t have to dust/organize/care for stuff then I have more time to do things that matter.

  6. WhiteCedar says:

    I think the whole “wants” vs “needs” dichotomy is generally outmoded. Both Johanna’s guitar and Trent’s video games, as they describe them, are absolutely vital to their thriving as individuals. They are necessary to their psychological well-being.

    Of course, we can survive without intellectual enrichment for a period of time, just as we could survive without proper nutrition for quite a while. But in both cases, we would gradually see the effects in our declining health.

    They do suffer from diminishing returns, however. Incrementally, each new game adds less to that enrichment than the one before, and at some point adds nothing at all if you can never play it. It’s like buying tickets for concerts that you will never attend. And food that you consume in excess of your caloric requirements has real costs associated with it as well.

    I think Trent’s re-framing the discussion with the question, “Is that item really adding significant value to your life?” is insightful, because it acknowledges intellectual and emotional needs as well as physical ones.

  7. Tamara says:

    Like FamilyLifeBoat at #1, I’m moving in with my boyfriend. He HATES clutter whereas I, well, let’s just say I have quite a bit of ‘stuff’. As I pack I think: What is more important, having this thing or having a happy boyfriend? He wins out 95% of the time :)

  8. Johanna says:

    @WhiteCedar: That’s an interesting way of thinking about it. I guess it’s a lot like clothing too – I could do without any one particular item of clothing from my closet, but I can’t do without all of them. I could do without my guitar, but I couldn’t do without my guitar, my books, my CDs, my DVDs, *and* my internet connection.

    Still, I prefer to think in terms of “wants” versus “don’t wants” rather than “needs” versus “wants” – it makes me feel better to remind myself that no, I don’t actually want everything under the sun (as the “needs” versus “wants” division implies that I do), and that I can afford all of what I need and almost all of what I want.

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