Peak Stuff

By Slow Dad - August 05, 2017

Every purchase incurs additional storage, maintenance, insurance and replacement costs. Consider the total cost of ownership before purchasing.
Over the years I have moved house 14 times. 5 of those moves have been international relocations.

The first of those international moves involved carrying all my worldly possessions in a single backpack, and cost nothing more than the price of my plane ticket.

carrying all my worldly possessions in a single backpack

My “one to wash, one to wear” philosophy covered pretty much every eventuality.

one to wash, one to wear

Needing to carry purchases makes them much less appealing

Purchase temptations were banished by the physical constraints of my backpack and the fact that I would then need to carry any purchases around with me, potentially for months!

Life was simple then. A super fun yet low cost lifestyle where the only expenditures involved covering my basic needs like accommodation, food, transport... and beer.

Life on the road was certainly an adventure, every day full of new experiences in exotic locales. However I always understood that if I ever wanted more out of life than to be still sharing a youth hostel dormitory with 20 flatulent, odorous, yet friendly backpackers when I was aged 80 then I was going to need to invest in myself and find a way to earn a decent living.

Eventually my wanderlust was traded for a home base, frequent city breaks, periodic week long adventures further afield, all funded by a monthly pay packet.

If it sounds too good to be true...

This is why I am skeptical when I read about some obnoxious 20 something preaching about how they “retired” after ~5 years in the workforce to travel the world, or a “global nomad” evangelising the low cost of living in Southeast Asia, or a burned out white collar professional trading it all in for life in a trailer park supported solely by an alarmingly small net worth.

a one way trip to struggle town

Sure it is possible, but without a sufficiently large pile of wealth behind them they can never hope for anything more... for many it would essentially be a one way trip to struggle town.

a one way trip to struggle town
Which is fine if that is a well informed conscious decision, while they and their families are healthy, and providing they don't incur any significant change in lifestyle costs due to circumstances beyond their control. As a wise man (or was it Forrest Gump?) once said "shit happens", which remains one of the few constants in life.

Spend less than you earn, and invest the difference

Personal Finance conventional wisdom has it that your get ahead by saving rather than spending.

Personal Finance conventional wisdom has it that your get ahead by saving rather than spending.
When you stop and think about this statement there are actually three key elements:

  1. Once you spend money, it is gone. As the old proverb says “you can’t have your cake, and eat it too”.
  2. Prudently investing the money, instead of spending it, should see that money will grow via the power of compounding.
  3. The total cost of ownership does not finish at the checkout.
For the term of its useful life you also need to:

  • store the item
  • repair and maintain the item
  • potentially insure the item against loss or damage
  • eventually replace the item
The total cost of ownership should be a key factor when considering a purchase, and one that most people fail to think about.

total cost of ownership should be a key factor when considering a purchase

Store it

The more stuff you own, the more space you need to store it. Storage space costs money. International shippers don’t charge by the weight or the value of goods, but by their cubic volume.

The longer you own something, the greater the lifetime cost of storing it becomes.

Property investors can tell you the price per square foot a given property is worth, and how much rental income each square foot can be expected to achieve. Self-storage places make a fortune out of people who own so much stuff they can’t fit it all in their homes.

Maintain it

Landlords will also tell you that eventually all things will break, wear out, or be stolen. They budget an annual amount to cover these maintenance costs, typically a percentage of the estimated gross rental income. I use a rate of 3.85% per annum, which was derived from my personal experiences as a landlord over the last ~20 years.

Insure it

Insurance is a contentious topic, with a huge variety of opinions about how much (if any) is required. The thing to remember about insurance is it exists to provide peace of mind, allowing somebody who is worried about a risk to lay off their exposure onto somebody else in return for a nominal premium.

As a general rule I would suggest only insuring those things you would actually bother to replace in the event they were damaged or stolen, and then only when the cost of the insurance premium and excess for each claim is not disproportionately expensive for the item being insured.

Again the longer you own an insured item, the greater the total cost of ownership associated with it will be due to the insurance premiums.

Replace it

The accounting term depreciation gets used to describe the reduction of an asset’s value over the course of its useful life. Different items will have different useful lives… a lounge chair will likely last for 10+ years (unless you have little kids), while a mobile phone probably isn’t good for more than around 3 years.

Therefore if you want to continue enjoying the capabilities provided by particular type of item, such as a refrigerator or television, then you will need to budget on replacing that instance of an item with a new one at the end of its useful life. Things wearing out shouldn’t come as a shock, and certainly can’t be considered an emergency.

Lifestyle inflation has many hidden costs

My last couple of international moves required one of Keith Tantlinger’s magnificent standardised shipping containers, and cost in the region of $5000! That is a cost over and above the actual purchase of all the possessions being relocated.

How did I get from happily living out of a backpack to needing a shipping container? I have long held a suspicion that possessions multiply when we are not looking.

possessions multiply when we are not looking
The journey from occupying a single bedroom in a shared house to owning a fully loaded 4 bedroom house was an unremarkable one, involving a long series of incremental yet largely unmemorable purchases. Over time all that stuff required an ever larger residence to accommodate it.

Lifestyle inflation has many hidden costs

By contrast the journey from that same 4 bedroom house to renting a small two bedroom flat that came fully furnished was memorable for its brutality. A basic physics problem meant the vast majority of my stuff was just not going to fit, so it had to go.

After garage sales, donations to charities, and giving stuff away to anyone who would take it there remained more than 40 large black garbage bags full of crap that needing disposing of. Just the thought of how much the aggregate cost of all that stuff must have been is enough to see me wanting to escape to my happy place.

Interestingly after a couple of weeks the only thing I actually missed was having a fridge with a large freezer compartment and a cold water dispenser.

I declare "peak stuff"

At that point I realised I had reached “peak stuff”. While I wasn’t back down to my trusty backpack, I no longer owned a ridiculous amount of possessions. This was largely made possible by the fact the place I was renting came furnished, so (with a couple of notable exceptions) I didn’t need to own anything larger than a set of towels or saucepans.

From that point onwards I was more mindful of potential purchases. I’d happily replace something once it reached the end of its useful life, but I would only add to my collection if I was satisfied there was genuinely long term value in the acquisition and subsequent ownership costs.

So what?

Over time as the size of my family has increased, so too has the size of my residence. I’m happy to report that this is more driven by peaceful coexistence and maintaining my parental sanity than due to an explosion in the volume of crap I own!

My possessions no longer seem to be multiplying when I’m not looking... with the exception of my kids’ Lego collection. I’m probably the biggest offender there, as I enjoy playing with them almost as much as the kids do!

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  1. You make a lot of great points! With two school-aged children, I think our family is nearing peak stuff. I look forward to following your path and moving in the opposite direction in the coming years!

    Another potential cost that I recently wrote about is the cost of disposing of some of this stuff. Some things are too big or too dangerous to go out in the normal trash, and oftentimes there are additional charges involved in disposing of such objects. To say nothing about the potential environmental impact.

    As you mention, it is wise to consider the true costs of ownership of any purchase!

    1. Thanks ROMY, and you raise a good point about the disposal of things. Services like Freecycle can be a great way to get rid of the bigger things, there is some truth to the saying "one person's trash is another person's treasure".