In a way, businesses have it easy. They can often calculate an asset's value using "return on investment" ("ROI"). That's because they use assets to make money. So if an asset costs $5,000 but it will make them $10,000, then they know they should buy it. They can also figure out how much it's worth "per month".

Consumers Need a Way To Value Assets: Benefit Per Month (BPM)

As consumers, we "consume" most of our assets to satisfy our needs and wants - not to make money. So we need another way to decide what they're worth. In MakeLifeEasy, we use "Benefit per Month" (or "BPM"). BPM isn't perfect -- far from it -- but it has some nice qualities:

1. BPM tells you how much an asset is worth to you in dollars each month. You can decide if you'd rather have the asset, or the dollars.
   
   
2. All of your assets can be compared by BPM, no matter what kind they are or how long you will own them. You can compare bread with pianos and shirts with cruises.
   
   
3. You can use BPM and BPM comparisons to decide whether you'll be happier to keep each asset you own, or to sell it.

When you buy an asset, MakeLifeEasy calculates your "starting" BPM by taking the price you paid for the asset and dividing it by how many months you plan to get real use out of it (usually just a guess, of course). This makes sense, right? If you paid $120/year for a magazine subscription, it must be worth $10/month. Otherwise, why did you buy it?

In fact, $10/month is the minimum BPM for that asset. For example, water is priceless since it's necessary for our survival. Isn't it great that we can get it for just a few dollars a day (more or less)?. We'd pay ten times that if we had to. The point is, you pay the minimum BPM for an asset.

Adjusting Your BPMs

The useful fact, though, is that you can use BPM to tell if you're paying too much for something. If that asset isn't worth at least $10/month to you, well... maybe you should sell it if you can...

But, before you do that, adjust its BPM to what you guess it might be (using the Saleable Assets report). Sometimes you can do this just by looking at a single asset itself. For example, "This second computer isn't worth $35/month to me. It just collects dust!" If that's the case, decide what it is worth to you and adjust the BPM accordingly.

Sometimes it can be a lot easier to decide this by comparing one asset to others. Of course, you must compare assets that are "discretionary"; that is, assets you don't need for survival or your minimum quality of life. So, many things you don't absolutely need cost a lot more than water -- so don't compare them to water, compare them to each other. Say you like basketball games more than wine. If your BPM for basketball games is $50/month, and your BPM for wine is $65/month, then something's wrong ... isn't it? You should either increase your BPM for basketball, or decrease your BPM for wine. To figure out which, you compare these with the other assets.

Finally, note that the BPM is a work in progress. We're improving this and we'll keep you posted with new developments.

Value Concepts

Getting Realistic BPMs and CPMs

Your Cost Per Month (CPM) depends a lot on how long you plan to use an asset.

Be realistic: Don't over-estimate how long an asset will be useful to you.

A good techique is to give an asset a short lifetime, then increase it later after you decide you really do want to hold on to the asset. Depending on the asset, give it a 1, 3, or 6 months. Then check in on it after that period to see if you still want it. If you don't, sell it. If you do, extend the lifetime to 1, 2, 3, or 5 years or more.

Other Things You Can Try

Here are a few other ways to sort and view the Saleable Assets Report to find good assets to sell:

1. (Optional) Sort by Acquisition Date (the AcqDate column) to check on assets you recently purchased. These may be big opportunities if you're open-minded. Be realistic and honest with yourself as you look at each item: Are you still using it? Do you like it as much as you thought you would? If not, now is a great time to sell it, while it's still fairly new and you can get a good price. Click on "Sell it" to continue.
   
   
2. (Optional) Do this every now and then, say once a year: Sort by AcqDate (same as above), but go to the end of the list (on the last page) to view the assets you bought long ago. They may no longer be useful to you. That is, the BPM may be zero. Clean up your house and your life by getting rid of these. Either sell them and pocket the cash, or donate them and pocket the tax deduction.
   
   
3. (Optional) Sort by Market Value. The assets at the top are the ones you could get the most cash for.
   
   

Related Topics

• Maximize the Value of Your Stuff (M-V-S)!
  
  
• How To ... Maximize the Value of Your Stuff (M-V-S)
  
  
• Specific Topics on Maximizing the Value of Your Stuff (M-V-S)
  
  
• M-V-S Concepts and Calculations (Advanced Topic)

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