November 19, 2015
It’s estimated that Americans spend more than $20 billion a year renting space in a self-storage facility. According to the Self Storage Association, the number of households renting out a storage facility has grown 65% over the past 20 years. It’s hard to drive more than a few miles in urban areas and not spy at least one self-storage business (and often more). The aggregate land mass for U.S. storage facilities spans a total of 78 square miles, or more than three times the size of Manhattan.
If you’re part of that growth story I think there’s a pretty good chance you are wasting a lot of money.
The average rental cost is about $120 a month for a basic 10x 10 space that isn't climate controlled. That’s $1440 a year! And if you’ve got a larger space, or a climate controlled unit you are shelling out even more.
I have two basic questions for anyone with a storage unit:
• Can you tick off a complete inventory of what’s in storage right now?
• Is every item a necessity, or of significant sentimental value?
If you have lost track of what you have in the unit, or can’t honestly remember why you put it in storage in the first place that’s a sign you are throwing money away.
Money that both you and I know could be more strategically used. How about being able to send an extra $120 a month to pay down a credit card balance? Or being able to set aside $120 a month more in your emergency savings fund? Or managing to save $1,440 a year in a Roth IRA?
Those are some seriously great financial steps that are easily within your reach if you simply decide to get rid of possessions that you no longer use or need. Not only will you save money, but I bet you will feel so much better once you have committed to some long overdue purging.
Answer Yes or No to the follow statements.
I pay all my credit card bills in full each month.
I have an eight-month emergency savings fund separate from my checking or other bank accounts.
The car I am driving was paid for with cash, or a loan that was no more than three years, and I sure didn’t lease!
I am contributing at least 10% of my gross salary to a retirement plan at work, or I am saving at least that much in an IRA and/or regular taxable account.
I have a long-term asset allocation plan for my retirement investments, and once a year I check to see if I need to do any rebalancing to stay on target with my allocation goals.
I have term life insurance to provide protection to those who are dependent on my income.
I have a will, a trust, an advance directive (living will), and have appointed someone to be my health care proxy.
So how did you do?
If you answered yes to every item, congratulations. If you are working on improving on a few items, I say congratulations as well.
As long as you are comitted to truly creating financial security, I applaud you. If that means you are paying down your credit card balances, or are building up your emergency fun with automated payments, that’s more than fine. You are on your way!
But if you found yourself saying No to any of those questions, and you’re not working on moving to Yes, then I want you to stand in your truth. No matter how good you feel, you have some work to do before you can honestly know what you are on solid financial ground.