Cut this one silly expense and you could retire with an extra $20K

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Stop Paying for a Storage Room

Are you among the 1 in 10 Americans who rent a storage unit? If so, there's a pretty healthy chance you're spending big bucks – as much as $300 a month in some areas of the United States – to store items that you don't need or use.

"Renting an off-site storage unit is akin to flushing money down the toilet," writes professional organizer Marla Ottenstein in the Naples Daily News.

Americans are expected to spend $32 billion this year on storage units, according to SpareFoot, a Texas-based self-storage listing company. Storage units aren't just draining your bank account. They could be preventing you from saving for retirement.

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Cut this one silly expense and you could retire with an extra $20K

Wyoming

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South Dakota 

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Virginia 

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Nebraska

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Idaho

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Utah 

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Colorado 

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Montana

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Arizona

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Iowa 

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A whopping 1 in 3 American adults have no money set aside for retirement. That's a pretty bleak picture.

So what items are Americans squirreling away in those expensive self-storage units? According to Bankrate, the top items Americans save in storage units include furniture, electronics, appliances, documents and files, collectables or antiques, vehicles, seasonal items, photographs, and books and other media items.

Undoubtedly some of the things we Americans keep in storage units are treasures — with either monetary or sentimental value. But probably not most. Imagine if Americans took the money they're pouring into storage units and instead invested it in retirement accounts. It would enable many Americans to build up a sizable nest egg for retirement. For that matter, what if we sold some of the stuff in those boxes (check out "Where to Sell Your Stuff for Top Dollar") and invested the proceeds for retirement or used it to pay down debt?

According to Bankrate, if you took the $100 a month you're forking over for a storage unit and invested it in a retirement account (with an annual return of about 8 percent) for five years, you'd have $7,348. After 10 years, you'd have $18,295 saved!

But it gets better. Let's say you're paying $200 a month for a self-storage unit. If you opted to invest that money each month instead, here's what you could see:

  • After one year: $2,490 saved
  • After five years: $14,695
  • After 10 years: $36,589
  • After 30 years: $298,072

Wow!

"In terms of value-cost averaging, renting a storage unit is never a wise investment," writes Ottenstein.

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Cut this one silly expense and you could retire with an extra $20K

Automate your finances. 

Set up your finances so that money is taken straight from your paycheck and deposited directly into your savings account or a retirement savings account. You can also set up your fixed bills like your Internet and cable to be automatically deducted from your checking account. Automate your finances to save time and prevent overspending. If you see extra money in your account, chances are you’ll find a way to spend it, leaving you little to invest in your future. Automation helps keep your priorities in line so that as money comes in, it is dispersed to your other accounts immediately.

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Cut back. 

At least twice a year, look at your expenses line by line and see if you’re getting the most bang for your buck. For example, do you read the magazines you subscribe to or maximize that gym membership? If the answer is “no,” consider canceling or negotiating a better rate. Take that money you save, and apply it toward bigger payoffs like debt reduction, retirement or an emergency fund.   

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Get rewards. 

Lots of people use debit cards to make it easy to buy and budget for groceries, gas and other routine purchases. Instead of doing that, look into a credit card with a great rewards program for those daily purchases, and set it up to automatically pay the statement balance from your checking account each month. Over the course of the year, you could potentially pocket a few extra hundred dollars just by using a card with a good rewards program instead of your ordinary debit card (just make sure you’re paying off your credit card every month, so you don’t pay extra in interest).

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Boost your income. 

If you love your job and want to grow your career, it's time to think about boosting your income as well. Make it a goal to negotiate a raise this year. Consider your strengths and look at the value you've provided to your company over the last six months to a year, and discuss it during a performance review. This can feel intimidating, but it never hurts to ask.

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Get a side gig. 

Take advantage of your skills, or turn a hobby into profit. Doing so can help you generate extra income – which you can put toward reaching your financial goals. Etsy, for example, is a great place to sell one-of-a-kind products.  If you have Web design, copy editing or other creative skills, consider offering your services on freelance websites such as Fiverr or Elance. These types of side gigs will allow you to earn extra income while also growing your skills.

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Track your progress. 

You can’t save money if you don't know where your money is going. Every month, track your net worth using a personal finance tool or app that will show you exactly where your money is going. This will make you think about your entire financial picture from income and expenses to investments and taxes. With this focus, you can ultimately make the greatest impact on your finances in 2015.

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Do you have a lot of stuff? Check out "10 Ways to Cut the Cost of Self Storage."

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