It took me a long time to create a savings account, or should I say, it took a long time for me to make it important. When I was getting out of debt, I followed Dave Ramsey’s plan and of his 5 baby steps, starting an emergency fund of $1000 is number one.
You’d think that paying down your debt would come first, but as Dave says, debt isn’t a math problem, it’s a behavior problem. That same logic is why he recommends paying your smallest debts first regardless of interest rate. The momentum you create from small achievements (paid off accounts) fuels the biggies.
Why you need an emergency fund
When you turn your clutter into cash, you can use it for anything, but I recommend starting with an emergency fund. Things happen. Cars break down. Dishwashers explode, and other things that we don’t typically budget for come up. When there isn’t a safety net, panic ensues, stress builds up, and credit cards swoop in to save the day.
Emergency funds may not prevent emergencies, (although if you buy into Murphy’s law, they might), but they do alleviate the pressure of making decisions during an already stressful time, and they prevent emergencies from derailing your money goals of saving, or giving.
These 5 steps will help turn your clutter into cash for giving, spending, paying down debt, or creating an emergency fund.
1. Collect $1000 worth of clutter that you can sell
Keep your sanity and only include things that are $25.00 and up. Donate the rest unless you can bundle it into $25 lots, grab bags, or other offerings. Place all the stuff for sale in one central area. Clean it up and make sure everything works.
2. Do the math
If it doesn’t seem like you have $1000 worth of stuff, do the math and work with the facts. Start with the higher priced items. If there is something you can sell for $1000, you only need to sell one thing to fund a $1000 emergency fund. Two $500 things, or ten $100 things will work too … you get the idea. When you put the numbers on paper, you’ll see this is more realistic than it sounds. Check eBay to see what similar items are selling for. Your clutter might be worth more than you think.
3. Simplicity summit
If you are turning clutter into cash with a partner, or family, include them in the process with a meeting, or simplicity summit. Talk about why you want an emergency fund, or why you want to be debt free. Talk about gifts or other items that you want to sell. Ask them if they have any suggestions or concerns.
4. Sell that stuff
Decide how you want to sell your stuff in 30 days or less. Keep the time frame short or you’ll start to feel like you’ve turned your home into a flea market. Sell what you need for your emergency fund or to pay down debt, and then close up shop and donate the rest of your clutter so you can get on with your life.
- Yard sale: If you have a bunch of odds and ends and lower priced items, try a weekend yard sale.
- Classifieds: Sell your furniture and other items that will be pricy to ship on a local website that offers free classified ads.
- Auction: Sell your stuff on Ebay if you have the patience, or use a local provider that will sell if for you on commission.
- Consignment: You might have $1000 on hangers in your closet. Try a local or online consignment shop. They take shoes and handbags too.
5. Put the money away
Instead of putting the money in your bank, where you can easily transfer money from account to account, choose a different bank and start a new account. Your emergency fund should be easy to access when there is an emergency, but not so easy that you blur the definition. A weekend getaway is not an emergency.
Turn your clutter into cash and start an emergency fund for peace of mind, and to create the space you need to thoughtfully respond to surprises and emergencies without the extra stress of wondering how you will pay for them.
Turn your clutter into cash, and your cash into freedom.
I never get why people don’t have an emergency fund. As a parttimer I work less than most people around me, but somehow I’m also the only one saving a nice part of my salary AND having something leftover at the end of the month. It’s not that difficult. Really!
Excellent idea. However, if I had $1000 worth of stuff I could sell, I probably wouldn’t need to. I don’t have much around that I don’t actually need and use so to sell it would be counterproductive. We do have a local online yard sale so that would be my first choice when/ if I have something to sell. I have been looking at my “stuff” to see what I might like to part with though.
Great suggestions, Courtney! Also, make substitution using the other clutter and put your savings in your emergency funds. Eat the shell pasta instead of buying spaghetti and put a couple bucks in your fund. Watch a video from that Netflix subscription instead of going to the movies and stash $15.00 in your fund. Have a leftover buffet instead of doing takeout and throwing away perfectly good food to save another $20.00. The philosophy generalize to many things.
Wonderful advice, Courtney! Thank you. I never understood the importance of having an emergency fund. We started Dave Ramsey’s plan last fall, and the way he describes it really made it click. I don’t know WHY I didn’t “get it” before!
Nice suggestions! This is a good kick in the butt for me. I have literally a pile of items I’ve been wanting to sell for months now, but just haven’t taken the time to list them on Craigslist like I’ve been meaning to.
It would probably bring a couple hundred dollars in for us once I do sell it all, and it would be nice to put that extra money towards our savings account!
Over the weekend I listed 28 major items for sale on our NZ based website Trademe (sort of ebay meets craiglist). I have bids on several items which will see around $400 extra in my account by the end of the week and most importantly a whole lot more space and increasing momentum towards my tiny house build. Like Spider I have a smaller income than most and it can be erratic (my work is weather dependent) yet I seem to be the only one who has an emergency fund and a savings account simply because I absolutely have to. I also try to have $500 in cash hidden around the house in $100 notes (because I hate breaking them) that I can use if everything turns to custard. Turning clutter into cash is so rewarding on so many levels!
Great suggestions Courtney!
I had a huge library of books. I listed them on Ebay and made lots of money. I also listed furniture on Craigslist and other household items on Ebay. We used the money to pay off debt!
I love this idea. I do think it can be pretty hard to make $1000 off of used items– having sold brand new designer clothing to consignment, I’ve realized that even a few hundred dollars can be difficult to squeeze out. The bottom line is, the selling price of anything we buy drops immediately once we buy it. But I do think that selling clutter is a great way to create the funds we need for moments that truly matter!
I really loved this. It’s so hard save money and sell my things in my own little city.
I don’t have an emergency fund. I’m a fairly savvy investor and would rather have my savings invested in something with a decent return than sitting in a savings account earning nothing. If there ever was an emergency, I have a line of credit I can use and easily pay back. That’s always sort of been my philosophy. Whatever savings I have, it’s well invested, and if I truly had a big emergency, I suppose I could tap into that. But I’ve never needed to. I am fortunate that my monthly income is a healthy number, so I’d be able to manage an unforeseen cost. I realize that other people may need to plan more. I think a small emergency fund of $1k as you suggested is good though; there’s no way I would save 6-9 months of pay like suze orman suggests!! I’d prefer to invest well, even if it means the money is not necessarily easily accessible.