How Downsizing Your Closet Can Get You Closer To Retirement
Retirement comes with extra time to pursue new hobbies and visit loved ones, and the flexibility to travel. It’s also expensive, and requires long-term investing and saving throughout your working years.
But while contributing to retirement savings accounts and tapping income sources like Social Security are common strategies used to cover expenses in retirement, you may be surprised by the extra cash you can bring in by downsizing your closet. Decluttering your house may not be fruitful enough to cover your long-term health care bills or travel dreams, but it can allow your budget a bit more breathing room.
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The perks of downsizing your closet
Beneath the dust and cobwebs, the items in your closet — such as designer clothes, unused sporting goods, old electronics and collections — may be worth a significant amount of money.
The biggest perk is obvious: Selling these items means extra cash. But that’s also money that you can put into your investment portfolio to generate long-term returns. The S&P 500 has historically generated average annual returns of around 10%. Using that rate of return, an investment of $1,000 could grow to roughly $1,600 over five years. Though keep in mind that past performance in the market doesn’t equal future returns, and the S&P 500 may not see that high of returns over the next five years.
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Another option is to throw that extra cash into a high-yield savings account. It won’t grow as much as it likely would in the stock market, but it allows you to boost your emergency savings fund and savings for short-term goals.
Downsizing offers several benefits that extend beyond extra space and some additional cash. Selling clutter can reduce storage unit fees, if applicable. And a more minimalistic lifestyle can save time and money you’d have otherwise spent cleaning and maintaining a cluttered home.
How to make money from decluttering
There are plenty of platforms you can use to sell your items online, such as eBay, Craigslist and Facebook Marketplace. You can also trade in old electronics on Amazon and possibly sell unique items on Etsy. Platforms like ThredUp and Depop let you sell clothes online from your home, but you can also visit thrift stores and consignment shops in person to trade or sell items.
Use those resources to check what other people are selling similar items for so you can price competitively. Clear photos and descriptors that highlight what makes your items special can also help. And consider bundling: Just like at the store, buyers may jump at a deal.
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