Convert Costly Self-Storage Rentals Into Your Next Big CD or Down Payment
If you’re a fan of MyBankTracker, you know there are useful mortgage, savings and CD calculators on our site to help you plan and budget.
If only we had an equivalent calculator to show you how to convert costly self-storage rentals into a big CD or down payment on your next car or house.
To describe America’s costly self-storage consumption as an obsession would be a gross understatement. Rather, it has become a national epidemic -- a crisis of overaccumulation.
Amazingly, the Self Storage Association’s own statistics bear this out. Of the approximately 60,000 self-storage rental facilities worldwide at the end of 2013, about 50,000 are in the United States, generating $24 billion in annual revenues
For some perspective, it took the self-storage industry more than a quarter century to build its first billion square feet of space; it added the second billion in just eight years. Today, there are 2.4 billion square feet in rentable storage space in the United States, easily triple the size of Manhattan, or about 7.3 square feet of storage space for every U.S. man, woman and child.
Paralleling this phenomenal surge, the number of U.S. households using self-storage increased from one in 17 in 1995 to one in 10 today. On average, they pay $115 a month for a non-climate-controlled 10-by-10-foot unit and $146 a month for a climate-controlled unit.
Here are more typical costs, based on the fact we Americans are a nation of hoarders:
- 10x15 foot units cost $75-$140 per month or $115-$150 for a climate controlled space.
- A 10x20 unit ranges from $95-$155 per month or $170-$180 for climate controlled.
- 20x20-foot spaces rent for about $225 per month.
So, let’s be conservative and say you paid $150 a month to store your stuff for six years. That’s a total of $10,800, in other words, serious money. (The scenario is not farfetched, as about 30 percent of self-storage users rent for more than two years.)
A collection of excuses
Now, let’s look at the psychology of why so many Americans are invested in self-storage instead of Certificates of Deposits.
We like to pay for stuff we rarely use: Having stuff in storage is like owning a gym membership you might only use twice a year: once to open the membership and another close the membership. Ownership status outranks common sense.
We don’t have the time: We’re busy, yet lazy people. Our weekends are too precious for the drudgery of going through stuff -- exercise bikes, treadmills, plastic lawn chairs, computer monitors, stacks of old Readers' Digests, etc., we don’t need. We tell ourselves for a hundred or so, it’s a frugal luxury we can afford to live with for another month.
We don’t have the space: It’s no accident that storage unit mania sprang up in Texas and California, fair-weather locations where builders don’t routinely build basements as they do in the east. And attics aren’t what they used to be, either. Builders have replaced rafters with less expensive trusses, leaving less storage space under the roof. Garages also are inadequate. Some 65 percent of all self-storage renters have a garage but still rent a unit.
We can’t say no to a bargain: Signs offering “first month free” are too irresistible, the same way it’s too hard to pass up “free” puppies and “free” kittens. Any caring pet owner will tell you there are no such “freebies.”
We are a nation of eBayers: We buy other people’s junk so we can store it and resell it. The trouble is, junk depreciates while storage costs don’t.
We are constantly on the move: On average, Americans change residences 11 times in a lifetime. Job relocations, divorce and downsizing into smaller homes keeps our lives in transition, but our possessions dutifully follow us.
We are too optimistic: We keep that old sofa and eight-person dining room set in storage, in the faint hope that we might pull it out for that one big party or one big garage sale that never quite materializes. We justify keeping wardrobe boxes of old clothes, thinking we’ll be able to squeeze into them again, if we start dieting tomorrow.
Okay, we’ve been denting up these metal mini-storage units pretty good. We might have overdone it, because there are a few reasons to use one.
If you’ve just sold your home and are transitioning to a new one, you might have to park your belongings for a short term.
Similarly, if you’re an out-of-state college student, it’s probably smarter to put your stuff in storage for two or three months rather than haul it back home.
Another justification for renting a storage unit could be if you own a car in a major city. If you can park your car in a storage unit on the the edge of town, where units are typically built because the real estate is cheaper, you might reduce your monthly parking expenses, which can cost as much as rent itself.
While the above few reasons can be smart, disciplined choices, never use extra storage as an excuse for accumulating more stuff. If you’re going to hoard anything, hoard cash from the money you didn't waste on self-storage rentals and use it to to bulk up your CD or increase the down payment on your next car or home.