Financial Benefits of Decluttering

It pays off to unload items you no longer need (or never really needed at all). Check out this great article by Cameron Huddleston of Kiplinger.com.

I have been in a decluttering mode lately. It was sparked by moving my mom from her three-bedroom home to a one-bedroom apartment in my house -- and having to pare down her belongings. Spending weeks going through all her stuff to figure out what she did and didn't need (then selling and donating the unnecessary items) made me want to remove all the clutter from my life, too. A few articles I recently read fueled this desire even more.

My husband and I usually go through our closet once a year to clear out clothes we no longer wear. But an article in the New York Times about people who decided to wear only six items for a month made me aware that there still is a lot in my closet that I don't need.

We occasionally go through other closets, cabinets and drawers to rid them of items that don't get used and just take up space. After reading G.E. Miller's 3 Guerilla Tactics to Get Rid of Clutter on 20somethingfinance, I realized my haphazard keep-or-toss tactics weren't cutting it.

What resonated with me most, though, was a reader comment on the Opinionator blog post How to Lose a Legacy. The reader wrote about cleaning out his (or her) parents' home after his mother died and father moved out: "I wonder why we (me) hang on to stuff that really just takes up physical and emotional "room" in our lives; I s'pose it's because the "stuff" (as George Carlin so aptly and comically put it) signifies a longing to hang on to, or dare I say, cling, to memories using physical things... even if we actually wish we could just throw a lot of it in the trash."

It feels good to get rid of the clutter. This is a personal finance column, so I won't advocate just throwing your stuff in the trash because you'd miss out on the financial benefits of decluttering. Here's what getting rid of things you don't need can do for your finances.

1. Lower your tax bill. If you itemize on your tax return, take all that stuff to Goodwill or any other charitable organization and claim a deduction for your contribution. Goodwill has a list of price ranges for items sold in its stores that can help you figure out the market value of items you donate. If your noncash contributions total more than $500, you must complete Form 8283 and attach it to your tax return. Single items valued at $5,000 or more, regardless of condition, require a written appraisal.

2. Put money in your pocket. You've heard it before: One man's trash is another man's treasure. Have a yard sale (see these tips) or sell your wares on eBay, Craigslist and other sites (watch this video).

3. Eliminate financial mess. While you're decluttering, take the time to get rid of documents you no longer need and go digital with the rest. See Paper Records: What to Toss, What to Keep and Create a Digital Archive of Tax Records for help. This exercise can help you get your remaining documents organized, save you time as you prepare your next tax return and perhaps prompt you to find ways to streamline more of your financial responsibilities (by setting up automatic bill pay, for example, and eliminating all those monthly paper bills).

Reprinted with permission. All Contents ©2010 The Kiplinger Washington Editors. www.kiplinger.com.