The True Cost of Hoarding

Overbuying is a form of hoarding. It may not be dramatic enough to get featured on television, but it can still cost you in unexpected ways.

COVID-19 has ushered in a new way of life. We're spending more time at home, washing our hands like we're about to perform surgery, and, apparently, snapping up more products than we can use before they expire. 

We've heard about people like the brothers in Tennessee who purchased nearly 18,000 units of hand sanitizer to sell at exorbitant prices, and most of us have experienced a shortage of toilet paper, disinfectant wipes, and other important items. While there are certain things we should all have on hand in case of an emergency, it is possible to overdo it.

And, as forward-thinking as it may feel to prepare for the worst by accumulating more than you will ever need, hoarding comes at a cost.

The financial cost

Let's say you make a run to a big-box store every two weeks. Usually, you purchase a 36-roll pack of toilet paper for $30. It's enough to last your family two weeks. During one shopping trip, you notice people buying unusually large amounts of toilet paper and ask someone why. Once you learn that toilet paper may be in short supply, you panic and buy the last 10 36-roll packages on the shelf. As soon as you arrive home, you go online and purchase 10 more. Now you feel good about life, because your family has 720 rolls of toilet paper -- enough to last 40 weeks. 

You have just spent $600 on toilet paper. If you have an extra $600, that's fine. But if spending the extra money causes you to pay a bill late or miss a payment, the hit to your credit score could end up being far more expensive than you imagined.

That's because borrowers with the highest credit scores get the lowest interest rates and best terms when they take out a loan. Are you willing to pay hundreds or thousands of dollars more for a car, personal loan, or mortgage because you spent money you didn't have to stock up on toilet paper?

And once you decide that hoarding is in the best interest of your family, where do you stop? Let's assume you run back to the store to pick up more, and you purchase the following:

• 30 canisters of disinfecting wipes at $6 per canister, for a total of $180
• 20 six-roll packs of paper towels at $13 each, for a total of $260
• 25 bottles of hypoallergenic hand sanitizer at $7 each, for a total of $175
• 30 one-pound packages of lean ground beef at $6 per pound, for a total of $180
• Five 25-pound bags of brown rice at $35 each, for a total of $175

Including the toilet paper, you have now spent a total of $1,570 on duplicate purchases of just six items. You tell yourself you're looking out for your family, and that you will use everything you bought. 

However, the reality may not be what you expect.

The price of not using everything

So let's assume you will eventually use all the toilet paper and paper towels, provided you can find somewhere dry to store them, and you don't open the packages until you need them. Here's the reality regarding the other four items:

• Disinfectant wipes do not last forever. According to Clorox, their wipes have a shelf life of one year. Lysol claims their product has a shelf life of two years. That's not to say that older disinfectant wipes have no value, but they do degrade and become less effective. Besides, storing them in extreme heat and extreme cold destroys the preservatives and can lead to "fold mold." Fold mold refers to a fungus that develops in the fold of the wipes.
• Hand sanitizer expires about three years after it's manufactured. Since the alcohol content slowly dissolves over time, it loses effectiveness as a germ killer.
• Ground beef can be kept frozen indefinitely. However, it does lose quality over time. The USDA says that beef is best when used within four months of the date you placed it in the freezer. Can you safely eat it next year? Yes, but it may not taste like you hoped.
• Uncooked brown rice can go bad and give off a rancid odor. This healthier version of rice lasts only three to six months in a pantry, six to 12 months in a refrigerator, and 12 to 18 months in a freezer.  

How to be financially wise and get what you need

When it comes to hoarding on any scale, the term that best applies is "opportunity lost." Buying up as much as you can may feel good, but you owe it to yourself to consider if there is a reasonable way to get what you need while also prudently managing your finances. 

Let's say you refrain from buying more toilet paper or paper towels until you've used everything you've stored. That means no money was wasted on paper products. But what about the items that have become less effective or gone bad? Even if you've consumed half of what you purchased, you have $485 worth of subpar goods on your hands. While it may not seem like a big deal, what if you'd done this instead? 

• Purchased what you could reasonably expect to use and invested the $485 in a no-minimum IRA
• Added $50 a month to the IRA (approximately $1.64 per day)

If your investment earned 7% interest, it would be worth $1,119  at the end of one year, $1,797 at the end of 2 years, and $2,523 in 3 years. That's extra money you could use to plump your savings account. Or you could leave it where it is and allow compound interest to work its magic. 

It's natural to want to protect yourself and your family. The tricky bit is to rise above emotion in order to make carefully calculated decisions. It is possible to meet your near-term needs -- even in the face of a pandemic -- while continuing to invest in your future.