The Value of Anything Material

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The Value of Anything Material

Why your stuff is just crap…

I remember as a little kid, I use to collect baseball and basketball cards. My friend Brad and I would sit in our living rooms, arguing over which players we were going to trade. I remember I had a coveted Jim Abbott baseball card. He was a pitcher who only had one hand. ONE HAND!

He was going to be big, and that baseball card was going to be worth something. I had the 1990 Donruss brand card. I was going to be rich baby! I was going to send my kids to college on this one. Today, that card, which is probably in my momma’s basement, is worth a whopping $3.00.

If you only knew the hours I spent caring for that card, buying a nice protective shield for it so I’d be in mint condition—all for nothing.

I was fooled again when my mother surprised me with some of my cards from back home. I found my Kobe Bryant Rookie Card in the stash. Ahhhhhh man, one of the greatest players of all time. Are you kidding me, that has to be worth something, right? You guessed it, a brotha had a protective sheet over that one too. Looked that puppy up—you can get it at Walmart for $29.95.

Determining Value

The funny thing about material things is that they are only worth what people are willing or able to pay for them. That’s how capitalism works.

What I want to discuss is how sometimes we overvalue things that really don’t deserve that much value.

Someone at some point will decide that the Beanie Baby that you were so willing to knock an old lady over for is worth more than you paid for it, right? Reality is, one day, you’ll be looking at it, wondering what all the fuss was about.

Anytime you are dealing with material things, they have presumed value, but you need to really access how much outflow and inflow a particular material possession brings you. For instance, let’s take wine. If this Belle Gloss that I purchased from Trader Joes at $42 is going to give me $42 worth of value to my mouth, then it’s worth it. It is up to you to make that distinction. There is a big difference between purchasing something you’re going to use that will bring you value right now versus something you think you’ll sell later.

 

Your House is not an Investment

This is why I hate purchasing a home. Not because it’s a bad thing, but people seem to have trouble making the distinction. You see, when you live in a home and use it, it’s not an investment. It’s what we call shelter. The rain or snow, depending on where you live, and sometimes the sun are good things to avoid. As a matter of fact, here in San Diego, I like to keep the coyotes away from my children. That is how my home provides value to me. So, I could care less about my Zillow value. The home I live in now is not an investment; it is shelter, and just like I will not go out and purchase a wine I really can’t afford; we should not be doing that with a home either.

My current home is not here to fund my retirement. It funds my shelter until the day I sell it. My actions will determine if it becomes an investment or not.

Some people will sell their home, make money on the property, and run out and buy a bigger home. Well, shoot, all you did was make a trade!

However, if you sell it and you are downsizing into a smaller home, now it’s an investment. You might make a profit on your home going this route. It really depends on what is going on in the market. The amount of money you put into the home, taxes, and realtor fees also play a part. Most people will not do the calculations, and I’m willing to bet that most won’t make as much as they set out to make.

Your Home is a Liability

Here’s the thing, out of all the material things that you purchase for yourself, your home is the best imperfect options. Almost everything you buy is virtually guaranteed to go down in value—at best, it may maintain its value. I am told, by my wife, that purses and jewelry can be sold in the underground market, but whenever we need money, for some reason, those things are off the table. Therefore, it is an expenditure and a liability, in my opinion.

Since my children are probably not going to want to bring the smell of old people into their home (i.e., mom’s old purses), most of it will wind up at an estate sale. Like my baseball cards, they may go up in value, but not in any significant way that will change my children’s lives.

It’s All Crap

At the end of the day, as the financial leader of my home, if it isn’t an actual investment, it’s crap to me. It’s all just crap—material crap—that we use and abuse. The reason I like to have this mentality is that it keeps me from putting too much stock into things that I buy. It keeps me a little more level-headed about it. It keeps me from getting overly upset when things go wrong with my material possessions. So, let me list the things that are crap:

1. The house
2. The car
3. The jewelry
4. The shoes
5. The clothes
6. The purses
7. The wine
8. The watch
9. The stuff

If it doesn’t produce income in one way or another, then it’s crap. If you own a restaurant and you purchase food to turn around and sell to a customer, then the food is an asset for your business.

If you buy food for your children to consume, it’s crap. It may be tasty and nutritious, and it may be an investment in your family’s health. Side note—if you’re healthy, then you tend to perform better at work, which could lead to a pay increase. If you made that argument, I would agree with you. Otherwise, unless you have a magical onion that jumps out of your refrigerator, making it rain—then your groceries are crap. Your plain-old, non-magical onion is not producing any income for you.

The Magical Cow

This is why living below your means is so crucial to your overall financial health. It allows you to buy assets instead of buying crap. I get that some of the crap you buy makes you happy; however, having assets would make you even happier and more comfortable.

Imagine, if you will, I gave you a magical cow. I told you to put this cow in your backyard. Let’s say the cow pooped a $1,000/month for you. The better you took care of it, the more money it would give you. How well would you take care of that cow? What if you found out that the cow loved to get massages every day? Would you massage the cow? I would, and I wouldn’t be ashamed of it either.

When I’d have dinner guests over, I’d pause the evening to give my cow a massage. I’d even whisper in her ear a little bit because that’s how Betsy likes it—don’t judge me.

If you think that is weird, imagine my surprise when I see grown people treat their car like a magical cow. They’re out every weekend spending time with their car instead of their family because that’s what Betsy likes; they go over every detail of the vehicle, making sure she’s perfect. Honestly, I don’t get it.

I often walk over to my neighbor’s home to watch them do this just so I can be there in case money comes out of the car’s tailpipe. Now, if a dollar ever comes out of that tailpipe, the return investment for the owner is probably negative, but if I can get my foot on that dollar fast enough so that he doesn’t see the money, the return on investment is excellent for me!

The Point

The point I’m making is that when you have a family you and your family are going to want crap. Compared to the value of your family and the things that you absolutely need, everything that enters your home is crap. I also get that we all want some crap to make our lives easier or to make our homes look nice, but you have to be aware and constantly make sure that you can afford the crap that you purchase. This means, if you have to put it on a credit card, you can’t afford it. If you can’t easily afford your home, then you shouldn’t buy it. This is why following a budget is at the center of your overall family health.

The real value is in the people; what’s important is your family. Material things don’t matter—it’s all crap.

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*Investing involves risk. Depending on the types of investments, there may be varying degrees of risk. Investors should be prepared to bear a loss, including total loss of principal.

Photo by Mick Haupt on Unsplash