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Amortize Your Possessions

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I mentioned last Friday that I had recently brought a a new mattress and a new set of tires. When two big expenses come up like this, it makes you think about what else might come up next. "They" say things come in threes right?

In anticipation of that third item, I've decided that my to-do list is going to grow a little bigger. At some point in the next couple of months, I'm going to take a tour of all my possessions and assess how long each of them might last. For instance the bedroom set is about 9 years old now, but I think it could last another ten years without a problem. My couch is only 3 years old, but some of the cushions are going to need a little work in a couple of years. The microwave is pretty old and could be the third item to need replacing. At least that's not going to be a pricey fix.

Does anyone else take inventory of his/her possessions?

Last updated on December 23, 2007.

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5 Responses to “Amortize Your Possessions”

  1. Mihai says:

    Untill now .. NO.But I keep an inventory on my garderobe.There always must be something new, according with the latest trends.

  2. d says:

    I keep an asset account to track my belongings. I enter all big purchases to this account. Then I calculate how long I think the item will last (guess) and divide the cost by those years. Subtracting value through this “make shift” depreciation.

    I do not decrease the value of things that I think will hold value, such as Original Art Work. But, I also do not increase the properties value, even when I am told the value has increased. I leave it cost.

  3. To me it sounds like it would just force you to think about replacing things and run up your costs. Yeah your microwave is old and yeah there are nicer microwaves out there, but I’ve never heard of a microwave really dying and I can think of at least 3 family members who have microwaves that are 20 years old. I see what you are getting at with being prepared to have to replace something, but just make sure it doesn’t get you in the mindset where you think you need to replace something just because its older.

  4. JohnR says:

    For big purchases (maybe $500 ), this is a great idea. Its a good way to calculate the liquidity ratio you need to sustain. So, if you buy a new car and new furnace, air conditioner, and roof in 1 year, you don’t have to have as much cash on hand as if all these things were old. If you think about it, this is the way companies do it too. Say they buy a server at $50,0000. Although they really have to pay it all at once, the ammortize the cost over the expected life. Then, they budget based on this ammortized spending. So, this means they can’t buy a new server till the first ran off (or other things do). Of course, you have to do the cost calculation in arrears, but it is the same principle.

  5. pfodyssey says:

    I only keep note of the large items that may need replacement within the next year or so (for planning purposes). A quick note to My Financial Journey: My microwave just went out after about 7 years…the thing that makes it heat went kaput and burned up some other stuff in the process. The good news is that it was a lifetime warranty item and they gave me a new one at a pro-rated cost. I’m sorry you will probably not be any wiser (likely dummer) from reading this bit on the microwave, but thought I would mention. 20 year old microwave eh? Must be like having a small Sherman tank in the kitchen.

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