By Vicki Robin and Jacquiline Blix

We all have financial baggage – reminders and remainders of past decisions. The steps below – and the steps we’ll introduce in future Your Money or Your Life columns – will help you make sense of the financial patterns in your past and move toward financial intelligence and integrity.

The best way to start is to do a full accounting of everything you owe and own. If a full inventory sounds overwhelming or just plain scary, clearing out one closet or drawer is a good place to start.

This type of inventory is valuable for the following reasons:

• You’ll find out exactly how much stuff you have and own up to it.
• You’ll see where the money you’ve made in the past has gone – in other words what you’ve traded your time for.
• You’ll start a process of determining what’s most important in your life and how what you own fits in – in other words you’ll begin to define what’s enough.
• You’ll eliminate clutter.
• Your list will serve as a reminder of the resources necessary to produce the things you use – which will help you decide whether future purchases are really worth the money you’ll spend.

The “Making Peace with your Past” inventory

Once you’ve chosen your drawer or closet, take a sheet of paper and divide it into six columns labeled:
Item

1. Cost to Me ($)
2. Cost to the Earth (Hi/Med/Low)
3. Value to Me (Hi/Med/Low)
4. Value to Others (Name)
5. Sales Value ($)

In the first two columns, list each item and its original dollar cost. You probably won’t remember the exact amount for everything, but make and educated guess. At this stage, you will begin to see not only how much stuff you have, but how much money – or life energy – you’ve traded for it.

Even scientists don’t really know the true cost to the Earth of consumer items, but the third column is an opportunity to think about the amount of resources it took to make the items on your list. For example, a pen would include plastic, metals, ink ingredients, fossil fuel used for its manufacture and distribution, as well as other resources for packaging and advertising. Rate each item’s impact on the Earth as high, medium or low. (For an example of this kind of analysis, see Stuff: The Secret Lives of Everyday Things by John C. Ryan and Alan Thein Durning, available from Northwest Environment Watch: (888)643-9820; www.northwestwatch.org.

The fourth column lets you improve on the past with some soul searching. Before you can choose whether the value to you is high, medium or low, ask yourself a few questions: What value does each item have in your life now? When was the last time you used this thing? Does it still fit (either physically or psychologically)? Is it a necessity, a comfort, a luxury, or clutter? Does its current cost in time (upkeep) and money outweigh its usefulness?

The final two columns can help you find a new home for things that don’t fit you or your values anymore. In the “Value to Others” column, write the name of a friend or relative who could use an item right now. (If you think you might want it back someday, use our friend Jody’s, “semi-permanent long term loan,” where you can have it back when you need it.)

If you can’t think of anyone you know who needs an item, garage sales and consignment stores are ways to boost your savings. Or, get a tax break by donating the item to your favorite charity.

Think of this inventory as a “house cleaning” to clear some space in your life – both physical and psychological – for new and wonderful things to come.

Originally Published Summer 2000 in Real Money Newsletter
Reprinted Here with Permission of Co-op America.