If you’’re keeping stuff because you think it's worth money, I want you to be very sure you’re right about how much it’s worth. The simple fact is that most things are worth less than you think on the secondary market, and they’re often worth a lot less.
Let me explain.
I have a client whose grandmother gave her many Madame Alexander dolls throughout her childhood. If you’re not familiar, Madame Alexander is a collectible doll brand featuring themed dolls, book and movie characters, and historical periods. They can be played with because they’re not made out of breakable materials, but they are finely crafted and relatively expensive. You know - the kind of thing that many people keep new in box because they might be worth money some day!
This client contacted me because she was finally read to get rid of her doll collection. She knew she wasn’t going to use them, display them, or pass them on to anyone. At the same time, she didn’t want to throw them away, so she asked me if she should think about selling them.
I kind of already knew the answer, but of course I did the research. What I found out is that most of the Madame Alexander dolls sold over the past 50 years are worth $15 to $50 per doll at resale, even if new in box. When you factor in photographing, listing, and shipping a doll, that’s really not an amount of money that pays you back for your time and effort, let alone makes you money.
Fortunately, my client wasn’t hugely disappointed. I think she was prepared for the dolls to be worth less than she thought. However, there was something she said that really got my attention: she told me that her grandmother gave her Madame Alexander dolls specifically because “if you run out of money, at least you can sell your dolls.”
This line of thinking is so dangerous, and I see it all the time. I’m not a finance expert, but I do have an MBA and I know a thing or two. Financial security comes from two things:
Liquid assets you can use to pay for things in a pinch. Liquid means it’s money or you can convert it to money quickly and easily. Dolls are not liquid assets because they need to be sold first, which can take a lot of time or not work out at all.
Illiquid assets that grow in value over time. Illiquid means there’s a high cost to converting it to money, whether that’s in terms of time, effort, taxes, or other complications, and some of the most common types are real estate and stock. Very few assets appreciate in value over long periods of time, and dolls are not generally one of them.
So, when you’re thinking about an item you’re keeping, I really want you to ask yourself if you’re keeping it because you love and use it, or because you think it’s worth money. And if you’re keeping something because you think it’s worth money, I want you to find out right now how much money it’s worth today and what that trend has been over time. Because if that item isn’t worth much and has been decreasing in value, that’s neither money nor an appreciating asset. It can’t help you financially today and is unlikely to help you in the future.
Pro tip: search for that item as specifically as possible on eBay, and filter for sold listings. This will give you a ballpark estimate of what real people are paying for that item today. If there is a specialty market for that item, you can check there too.
There are rare cases where something holds or increases in value, and is more liquid than other items because of high demand in the market. The most common items of this type are jewelry, watches, designer leather goods, and certain designer furniture. But even so, know that this can change at any moment as trends and tastes change! China and silver used to be hugely valuable, and now you can barely give it away - unless you’re selling your silver at market rate to be melted down.
And then guess what? If you're in a financial pinch and you need to sell some dolls or jewelry or shoes, lots of other people are probably in a financial pinch too and they don't want to buy dolls or jewelry or shoes. That's the thing with illiquid assets. When you need to sell them, you might not be able to.
These are all the dynamics I’m thinking about when people tell me they’re holding on to stuff because they believe it has value. Is it really worth that money? Could you actually convert it to money if you needed to? These are tough questions, but you can answer them, and then you’ll be able to make a much more informed decision about what you should really keep.
LMW
