You may have $100k in your Closet…and not even know it!
A Lesson in “Opportunity Cost”
What if I told you that you had $100,000 in your closet right now, would you do anything about it?
Before you write this off as an unrelatable situation that does not apply to you, hear me out.
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Many of us play an instrument, and for some of us there has been a progression from our starter instrument, high-school instrument, and ultimately our college/professional model.
Do you have an instrument you no longer use in your closet? Do you have countless mouthpieces, mutes, bows, microphones, keyboards, or even cases you no longer use? For most musicians, the resounding answer to this question is “YES”!
Let’s say you have an extra/old instrument valued at $2,000 which you don’t need but you are holding on. Perhaps this is for nostalgic reasons or perhaps you just haven’t gotten around to dealing with it. Let’s look at what this is costing you long-term….
https://www.moneygeek.com/compound-interest-calculator/
Wow, nearly $110,000! Surprised? If you sell your instrument or accessories at age 30, this would give you a nice extra 100K to retire and travel with during your early 70’s.
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Now let us take a look at another case study. Most of us do not stop buying new equipment as our careers evolve and grow. We purchase new mouthpieces, mutes, head joints, ligatures, and microphones yearly at the very least. A trumpet mouthpiece by the maker I currently play on sells for $200 - $300 used! Is it reasonable to think that you could find one mouthpiece to let go of every year as your collection grows? I would say “Yes” (at least for me!).
Here is what the financial results would be if you sold one item valued at $250 per year in addition.
https://www.moneygeek.com/compound-interest-calculator/
By being mildly responsible with your equipment accumulation, you could be earning yourself a not-too-shabby quarter of a million dollars in your retirement/investment portfolio!
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OK, for those of you who are thinking you don’t have any spare instruments and are not plagued with having to buy copious amounts of mouthpieces, or reed-making machines, let me give you a glimmer of inspiration.
For every $200 you earn selling something you no longer use in your garage or music studio, you are giving yourself the “opportunity” to invest and earn $10,000!
Perhaps with that last example, you might be starting to realize the reverse methodology of this whole post. Which is for every $200 you DO NOT SPEND, you are potentially getting a very REAL monetary gain of $10,000 if you were to invest that $200 instead.
A lesson we all must remember is that our savings rate is always more important than our income or salary! Someone making $65,000 a year in after-tax income, who lives off of $45,000 a year is always going to come out ahead of someone who makes $250,000 but spends $240,000 of it.
In a world where we all seem to want more and desire higher compensation, it becomes interesting to realize the power of mindful consumption. It’s not glamorous or something you can post on Instagram, but this mentality will allow you to have a savings rate that makes you wealthy over time.
If you want your mind blown and your life to change forever, please read my favorite blogger’s amazing post which expands on the above concept. Mr Money Mustache - The Shockingly Simple Math
That’s all for now…see you on Facebook Marketplace! ;)
- Ryan
