|From Wikimedia Commons|
As I wrote before, to measure your productivity, divide your revenues by assets. To improve productivity, either increase your revenues or decrease your assets.
This is also true for your personal finances. Doing more in your life with fewer assets can greatly enhance your financial and personal well-being.
I found a great example of this in The Simple Dollar. When Brent and his wife were looking for a new house, they thought they found something perfect:
My wife had spent time cleaning houses for others and she knew quite well that the time and cost invested in maintaining a home is almost directly proportional to the square footage of it. We also knew that property taxes were also highly related to the livable square footage of the house in that area, thanks to the assessor’s website.
In other words, we’d be spending many hours a week just on household maintenance and cleaning for this house, and our property taxes would end up being pretty high, too. We would be continually paying, with our time and energy and our money, for every square foot that we bought.
To Brent and his family, the extra space wasn’t worth it. Not only do assets cost money to maintain. They also cost money to defend:
When I asked my friend why he went through with the expense and the annoyance [of installing an expense burglar alarm system], the reason mostly revolved around all of the expensive stuff they had in their home. They had to protect the beautiful couch, the 60″ flat panel television, the state-of-the-art Alienware laptop, the multiple Macs in the house, and so on.
After hearing that, I quickly realized I wouldn’t want enough valuable stuff that I had to pay for such a security system. If someone breaks into our house thinking they’re going to make off with a jackpot, they’re going to be sorely disappointed by the old computers and so on. They do their job, though, and they keep our life nice and simple.