1.57 pennies earned after tax savings. If you jump through the hoops to deduct those items, you are saving about a third of the current value of the item. Example: donating a blazer valued at $6 reduces your adjusting tax return income by $6, saving you $2 in taxes. Pull a whole stack of clothes out of your closet and that could add up fast! The Salvation Army put together a generic price guide that will help you determine the value of your donations.
When getting your act together financially, you probably wouldn't think to put decluttering on the list. Sure, decluttering feels nice, but does it have anything to do with finances? YES! There are so many benefits to clearing out your crap that it's worth going through the whole house. I can think of 8 quite serious financial benefits:
1. Sell your Junk
The most obvious way to have a financial gain while decluttering is by selling your junk. I use Facebook sale pages or Craigs List for any item that is either common or large (such as generic clothes or furniture). I use Ebay for more unique items like homemade Halloween Costumes, vintage computer games, non-local college paraphernalia etc.
One thing to note is that many items are simply not worth your time. It might take 3 hours to photograph the item, put together an advertisement, and answer endless questions for iffy buyers. Then you might have to rearrange your schedule to be home for them to come get it or package it up and take it to the post office during their operating hours. If the item was only $5, maybe you should just put it in a bag with other stuff and take it to a donation center.
Solution: I've never hosted a yard sale in my adult life because my city is a pain about it, but if you are doing a lot of items, yard sales are a great way to move smaller items that people might not drive out for. Despite taking a lot of time and effort, it is still much easier that listing a bunch of small items separately.
2. Donate your Junk
Don't worry! Even donating your items can directly return you money. If you donate to a charity such as Goodwill, you can write off the items as tax deductions!
They say a penny saved is a penny earned, but I've calculated it out to
Of course with anything government there's paperwork: If the year's cumulative donations are under $500 in value, than everything is simple (double check me, rules tend to change over time). Just make sure to get a receipt when you drop the items off so you can have proof for audits. Once it is over $500, you need to document more information such as how the value was determined (independent appraisal?, comparing to other prices in the thrift store?). Make sure to get your paperwork done at the time of donation! (more info)
This is all only applicable if you are itemizing your deductions. With the new increased standard deduction, this will apply to many fewer people. Is anyone else bothered that the standard deduction is increasing? Sure it is extra money in my pocket, but for most people, it eliminates charitable incentives by just handing it out to everyone. Okay, my rant is over.
3. Eliminate future Junk
Once you've gone through and purged your belongings, you'll become much more picky about what you buy. I've personally noticed that the more crap I throw away, the less crap I buy. Now, when I see that fun, cheap, non-necessity in the store, I see myself throwing it away in my next purge. No longer tempting.
The bonus benefit to this one is you'll also see an increase in the quality of your products. Example: I used to feel like I needed a new wardrobe. I had so many worn out clothes from high school and almost nothing without pit stains. Once I started going through it and clearing things out, I realized that I have plenty enough good clothes, they were just hiding with the old ones. It's a work in progress, but eventually I'll get rid of all my "meh" shirts and only have "yes" shirts. Basically, I'll get a "new" wardrobe without spending a dime, or at least if I buy something I'll know what I actually need. Moral of the story: if you purge your crap, all you'll have is quality and you won't feel like you need to buy.
4. Open up your space
How much does your home cost per square foot? Mine is less than most because I live in the middle of nowhere, but even my house costs $72 per square foot BEFORE you add in all the interest payments and property taxes over the years. Let's say you clean out 10% of your space. You've effectively just saved tens of thousands of dollars on a larger house!
If you currently rent a storage unit, there are some obvious savings potential there. Even without a storage unit, if you clear out enough space, maybe you'll consider downsizing your home or monetizing some of the space by taking in a tenant.
5. Know what you already have
How many times have you bought something only to discover you already had what you needed? How many opened bottles of the same type of glue do you have? Ever buy something that you know you already have but couldn't find it? Decluttering gives you a chance go dig through all of those piles and know what you already have and where it is so you don't have to hit the stores as often.
6. Shopping in your Junk
The best place to shop is your closet. This week, a friend asked me when I start my Christmas shopping. I gave the quick answer of "last year", but the truth is I don't really shop. I scrounge and squirrel away.
Most things I give away cost $0-1. I am not above re-gifting items that would become clutter at my house and love re-purposing old things. For example, I made an old pajama shirt into a toddler apron for my niece and I made string art out of some scrap particle board covered by a poor fitting t-shirt with finishing nails and embroidery thread. Just this month I turned a polo shirt into a gym bag and some dog fencing into a tomato trellis.
7. Reduce country's consumption
When you give away or sell the decluttered items, you are redistributing items to people who want it more than you do. If all items were redistributed optimally, we would buy much less as a whole. This leads to less consumerism, stronger savings, greater physical investment, and actual growth (despite flawed GDP theories). In other words, this is how you make America great again.
8. What goes around comes around
When a friend thinks of me, I'm much more likely to think of them. This isn't because I require other people to give me gifts before I'll return the favor, but because their action created an association between themselves and looking out for other people. I bet as you find thoughtful items to pair your family, friends, and associates with, you'll inspire others to do the same. Don't be surprised when you become the recipient.
Even more than just getting things from your associates in a circle of giving, donating actually boosts your income! It sounds backwards, but there is statistical evidence to back this up. Arther C. Brooks set out on a quest to prove that earning more leads to more giving, but kept getting what he believed to be erronious results: giving leads to more earning. My guess is this has something to do with the fact that giving makes you happy which leads to interview accpetances and boosts job performance. In any case, what a great excuse to donate!
Basically, as backwards as it sounds to the usual "frugal hoarders", decluttering is one of the best ways to get started on a frugal life!
Resources to Help You!
Not sure where to begin? Here's Heasly's list of places to purge for her "40 bags in 40 days" callenge.
Having a hard time getting rid of "just in case" items? You could try the 20/20 rule by "the minimalists" or your own modified version: If it costs less than $20 to replace and can be found within a 20 min drive, just replace it when you need it.
Don't know whether to trash, donate, or sell your finds? Here's a guide by "clean and scentsible".
Also from clean and scentsible:
"If you do not love it, use it, and need it, it should probably be in the garbage or donate pile. If you are having difficulties getting rid of things, you may want to read this post for some helpful tips on overcoming decluttering paralysis"
Good luck friends!
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Note: Any financial choices you make are yours alone. I cannot be held responsible for any results or legal implications of your choices.