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By Frank Curran: Principal and resident at The Fairways at Savannah Quarters, west Savannah’s finest Active Adult community.
When is a $4 coffee mug worth $8? According to students at the Columbia University School of Business, the answer is “as soon as you own it”. Columbia professor Eric Johnson regularly conducts a classroom exercise that proves this point. He divides his class into two groups. The first group is shown a coffee mug, and asked how much they would be willing to pay for it. Most of the time the answer is around $4. The individual members of the second group are each given a coffee mug that is identical to the first mug, and then asked how much they would be willing to sell it for. The members of the “selling” group generally want, on average, about $8 each for their mugs.
The professor uses this experiment to begin a discussion of the principle of “loss aversion”. The essence of loss aversion is that simply owning something increases its value (to us). We don’t like losing something once we own it. When it comes time to downsize our household and move to more practical quarters, “loss aversion” sets in and makes us crazy. We dig in our heels and resist the idea of pruning our belongings to a more practical level. After all, we spent most of our adulthood accumulating a house full of furnishings, tools, and memorabilia and we are reluctant to part with any of it.
That’s a perfectly normal reaction: everyone has it. But, those individuals who have successfully downsized a household all tell me the same thing: it was remarkably easy (and fun) once they actually decided to do it. The trick, they say, is to look forward rather than backward. To a person, the downsizers I have spoken with have described the process as “liberating”. They say that they didn’t realize how much their belongings “held them down” until they got rid of most of them. Downsizers each developed their own individual system for getting the job done, but there are a few techniques that almost everyone used to make the downsizing process fun. Let me pass on a few of these tips:
1. Before even starting to consider the disposition of your personal property, begin by finding your new living quarters. Make a list of your ideal circumstances: what sort of people do you want for neighbors? What social activities are available to your neighborhood? What sort of things do you enjoy doing? Are those activities provided for in your “new” neighborhood?
Once you have decided on the “lifestyle” issues, begin to look at housing that will meet your needs. Make sure your quarters are big enough to be comfortable but small enough to be practical. How close do you want to be to shopping, hospitals, and transportation? How about security and maintenance issues?
2. Here’s the fun part: once you have decided on your new residence, shop for the furnishings you’ll need to make your new home livable. You can take favorite items from your existing home, buy new, or a combination of both. The point is to createa comfortablenew living environment and separate yourself from your old residence. When you have completely furnished your new home, you have moved forward with your “favorite things” and left the rest behind.
3. Now, let go of the rest of your possessions. This will actually be easier than you think. Since your new home is comfortably furnished with many of your favorite things, you’ll find that your attachment to what is “left over” has diminished. But, you will still have to empty your house if you want to sell it. Here’s a painless way to proceed with liquidating your remaining household goods:
- Invite your family members to choose items that they would like as keepsakes. Alternately, you can choose “who gets what”.
- Hire an Estate Sale company, an Auctioneer, or a Yard Sale company to sell off whatever is left. Trust me; these folks are worth every penny that they charge. Organizing and executing a sale is tedious, hard work. It takes as much work to execute a sale as it does to move a household from one location to another. You can avoid the entire process by hiring it out. Plus, when the sale is over you get a check. What could be better than that?
If you decide to liquidate your remaining possessions by having a sale, let me recommend that you don’t attend the sale. Doing so will only dredge up old memories, and the purpose of the liquidation is to move forward with your life.
Downsizing your home can be an adventure. You get to choose your new life and your new living circumstances.You get to re-create yourself, to create the “you” that you’ve always wanted to be.
