Hoarding often impacts a person’s life far more than they realize. One negative effect it usually has is on a person’s finances. Hoarding can lead to overspending in several different ways. Plus, it can increase costs in a variety of areas, causing it to harm a person’s budget from both directions. If you’re wondering how it has an impact, here is a look at nine reasons why hoarding is bad for your finances.
1. Spending on Items You Don’t Need
One of the biggest drawbacks of hoarding is the tendency to purchase unnecessary items. Many hoarders don’t simply collect things they come across for free; they buy items that they intend to keep. As a result, they are more inclined to overspend.
Precisely how this unfolds can depend on the nature of the hoarding. However, it’s a common characteristic, and it can significantly harm budgets.
2. Losing Track of What You Have
If the hoarding reaches a level where the person can’t track what they already have, they may forget they’ve previously purchased a particular item. When that occurs, the odds that they’ll buy it a second-, third-, or fourth-time rise. That can lead to significant financial waste.
3. Storing the Excess Items
Hoarding requires a significant amount of space, at times to the level of impact a person’s budget. One way hoarding can impact your finances is it may require you to keep a larger home that you’d otherwise need, which increases your housing costs. You also can’t take advantage of certain money-making opportunities, such as renting a room out through Airbnb, because it’s overrun with clutter or your house isn’t generally presentable.
If you need to store the items outside of your home, you’ll encounter new costs. Purchasing a backyard shed to hold stuff comes with a price tag. The same goes for renting a storage unit.
4. Misplacing Mail in the Clutter
Depending on the severity of your hoarding, the amount of clutter could lead to misplaced mail. While this doesn’t sound like a financial issue, it can come with money-related consequences. For instance, you might overlook a check that was sent as part of a refund or gift. Bills may also get misplaced, increasing the odds of a late payment and the fees, penalty interest rates, collections, and more that often come with it.
Overlooked mail can also mean you aren’t capturing opportunities to save. For instance, you might not notice a coupon or sale announcement that includes an item you need. As a result, you might spend more than you would have if you saw the discount.
5. Rising Healthcare Costs
In some cases, hoarding can create unsanitary conditions. Mold and mildew may occur if items trap dampness, with can potentially lead to breathing issues. Hoarding may also lead to pests, including insects and rodents, which can also harm your health. For example, rodents and insects may carry dangerous diseases, some of which are potentially deadly.
Hoarding can also lead to higher levels of stress. You may also have trouble maintaining a healthy diet if your kitchen is overrun with stuff, which can lead to health issues.
Addressing any health issues created by hoarding will impact your budget. Medical care can be spendy, particularly if you need an emergency room or other forms of quick care. By not hoarding, you can potentially avoid certain health problems, allowing you to reduce your healthcare spending.
6. Increasing Insurance Rates
How much you need to pay for renters’ or homeowners’ insurance directly connects to the value of all of your belongings. That means hoarding can result in higher rates, mainly because you have far more stuff that you’d need to insure.
Now, this is generally only true if you update your policy in accordance with your acquisitions. However, if the hoarding tendency is connected with items that have genuine value, failing to do so means the coverage falls short of what it would take to address the losses.
7. Missing Refinancing Opportunities
When you refinance a home, your lender might require an appraisal. If so, an appraiser will need to enter your home and assess its condition. If you have a habit of hoarding, this could limit your refinance opportunities.
Many people with a hoarding habit want to avoid having others enter their house, causing them to bypass lower interest rates to make that unnecessary. For those who are willing to let the appraiser come in, their hoarding may result in a reduced assessed value, which could prevent a refinance from going through or may otherwise alter the outcome.
8. Struggling to Sell a Property
In a similar vein to the point above, hoarding makes a house harder to sell. If the items aren’t removed, it’ll impact buyer perception during viewings, leading to lower and fewer offers.
Plus, severe hoarding often comes with avoiding situations where others may have to enter the house. As a result, maintenance issues are common, and that can diminish the value of the home further.
In some cases, hoarders may only get offers from investors who are willing to deal with the fallout of the hoarding. Since investors usually intend to flip the house or convert it into a rental, they aren’t going to offer anything close to top dollar.
9. Harming Item Condition
With hoarding, properly storing items isn’t always part of the equation. As a result, the condition of the hoarded goods tends to decline. For hoarders that treat their purchases as investments, that means they are harming the resale value of the goods because they aren’t caring for the items correctly.
While most hoarders likely don’t intend to sell, should a time arise when they do want to part with the item, it won’t command the same price. In some cases, even with collectibles, the value may decline below what the hoarder paid, resulting in a financial loss.
Can you think of other reasons why hoarding is bad for your finances? Have you experienced any of the drawbacks above and want to tell others what it was like? Do you have any tips that can help someone recover from hoarding tendencies? Share your thoughts in the comments below.
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Tamila McDonald has worked as a Financial Advisor for the military for past 13 years. She has taught Personal Financial classes on every subject from credit, to life insurance, as well as all other aspects of financial management. Mrs. McDonald is an AFCPE Accredited Financial Counselor and has helped her clients to meet their short-term and long-term financial goals.