52 Weeks to a Simpler Life – Tip #30 – Buy Used and Save Money

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Buy used? You mean buy someone else's problems? How does that make my life simple. And, how will I save money? I'll end up spending a lot of money on parts and repairs.

Yes! I'm saying buy used. Certainly, there are some things it doesn't make sense to buy used, especially if they are low cost items and the difference between buying new and buying used is not significant. I usually figure I'll buy anything under $100 new. Especially, if the seller of a used item want's $50.00 to $75.00 for a used version, I'll buy the item new.

However, when you're talking about higher priced items, buying used will often save hundreds to thousands of dollars. Yes! I'm even including items that may need repairs. I've found when I'm looking for cars, professional recording & video equipment (my profession) and many other household appliances, I have probably saved way into the six figures over my lifetime. That includes any repairs I may have had to make. 

Have I ever been stuck with a lemon? Yep! However, I've owned six new vehicles out of about 24 vehicles total during my lifetime. I've had significant problems with four of the six new vehicles. Even with warranty service, they cost me both time and money. That's the nature of almost anything.

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Buying Used Vehicles vs. Buying New Vehicles

Let's consider motor vehicles. The first thing to consider when buying a new vehicle is the massive amount of mark up in the vehicles. The large profit item is not actually the vehicle. Yes! The dealer makes money on the cars through rebates and other incentives from the manufacturer. However, there is more money in that vehicle than on the basic vehicle MSRP (Manufacturer's Suggested Retail Price) or what may also be called the List Price or Sticker Price. The real profits are in all the upgrades. Upgrade to a higher model. Upgrade to leather upholstery. Upgrade to premium sound system. Upgrade to premium wheels and tires. Upgrade to touring suspension. Upgrade! Upgrade! Upgrade. The prices of the upgrades are inflated unmercifully.

Let's say the vehicle final price comes to $36,000.00 and the dealer discounts it to $32,000.00. The instant you sign the sales agreement, take possession of the keys and drive off the lot, the value is instantly reduced to approximately $22,000.00 depending on the brand, model and options. That's a potential instant loss of $10,000.00 of your hard earned money. It could be a little less or it could even be more. The second year you own that vehicle the value will typically drop another 15% to 20%. This will continue until the new vehicle is about five years old when it will have typically lost 60% of its value or more. So, that $36,000.00 vehicle you bought new for $32,000.00 will be worth, approximately $10,000.00 . . . and that depends on many variables.

Of course, after the warranty runs out, you have to pay for any major and minor repairs. You could be lucky and not have many or any. That's not likely, a vehicle is a machine and machines wear and breakdown. I had a brand new 1978 Chevy van. It was a beauty. It had an 18,000 mile warranty in those days. The transmission went at 18,500 miles. I was able to fight my way to having Chevy replace the transmission, but I had to pay the labor at full book rates. It still cost me a lot of hundreds of dollars.

I had a brand new 1984 Chevy S10 Blazer. It went through three engines and a transmission by the time it reached 100,000 miles. All of that began occurring just after the warranty ran out. Actually, I also had a CV joint go out, just before the warranty ran out. That cost me a fair amount of time.

On the other hand, I bought a used 1996 Cadillac Seville STS used in 2003. It had 104,000 miles on it. I paid $8,000.00. The original invoice sticker was still in the glove compartment. The original price of that car in 1996 was $48,000.00. So, I paid about 17% of the original price of the car. I drove the car for seven more years and put 152,000 more miles on it before I sold it for $1,000.00 at 14 years old. Yes, I had to put some repairs into the vehicle over the years.

So, let's say I put a total of $6,000.00 of repairs in the car. I paid $8,000.00 plus $6,000.00 in repairs minus $1,000.00 I recouped when I sold it. That car cost me $13,000.00 to drive for seven years or approximately $1,860.00 per year or $155.00 per month. I'm not including any financing costs for either a new or used car.

To purchase and drive that same car from the time it was new to 152,000 miles (the mileage I put on the car during the seven years I owned it) would have cost me about $42,000.00 which includes the amount I might have actually recouped when I sold it or been allowed on a trade-in. Then let's add on only $3,000.00 for repairs during the seven years. The total cost to drive that same luxury car from the day it was new and titled to me would be $45,000.00. Over seven years the cost would be about $6,400.00 per year or about $535.00 per month.

These figures also don't take into account any costs for personal property tax if your state charges such a tax as Virginia does when I lived there. Nor does it take into account the higher cost for auto insurance because the repair costs or cost to total a car when it's new is so much more than when it's older.

The savings to me was probably about $400.00 per month or $4,800.00 per year for driving the same luxury vehicle and enjoying it just as much. In my book, the new car smell (which can be sprayed into a used car) just wasn't worth nearly $5,000.00 per year.

Does this make any sense to you? It sure does to me.

Professional Equipment, Hobbies, Etc.

I mentioned that I also buy my professional equipment used most of the time. This could be true for hobbies, too. I'm an amateur radio operator. It's easy to spend a sizable amount of money on radio equipment. Photography equipment can also be very expensive. A lawn tractor can set you back a pile of wampum. A new refrigerator, freezer and stove can dent your bank account. That boat, jet ski or ATV can do the same thing.

All of these things can be bought used. In most cases, you'll find they have been respected and well cared for by the previous owner.

The recording industry has been (and continues to) transitioning from the analog equipment I learned and practiced my profession with for the first 30 years of my career to the digital domain. I had to go with the flow. All the new gear is pricey when it is first introduced. However, because electronic and digital technology has been advancing so fast, I knew what I wanted, if it cost $1,000.00 new, would potentially be worth $300.00 to $400.00 within two to three years. So, as I went through the various transitions, I carefully studied the market, watched the trends and then usually bought a used piece of gear.

I did buy a couple pieces new. In one case the item was so new, I had to wait for the first shipment to enter the U.S. I needed it for several specific projects.

I bought the other unit new because I knew a distributor who needed a piece of analog equipment I had and he offered me a deal. He offered me a premium price for my used analog unit, considerably more than I had paid for it used. He also sold me the new digital recorder I wanted for his factory invoice price. I only had to add a few hundred dollars to acquire the new digital piece of equipment. I used that new piece of equipment for 10 years with never a repair needed. When I finally sold it and ran the numbers, I actually made money on that item. Plus, I made tens of thousands of dollars in income using the item for those ten years.

Those were two unique deals. Typically, I will wait until I start seeing used pieces of the newest technology appearing on the market. I will then look to pay between 50% and 66% of the going new price. I've never had a used piece of equipment fail to work properly nor have I received it in abused condition.

I bought one recorder for $850.00 that was selling for $1,300.00 new. That's a fraction under 66% of the new price. It was complete, less than a year old (the technology was only about a year old) and came in the original carton with everything the factory packaged with the item. I used that piece of equipment for about four years and sold it for $250.00. So, it cost me $150.00 per year or $12.50 per month and it produced thousands and thousands of dollars of income for me.

Clothing And Other Necessities

There are so many ways to purchase specialty, necessary, hobby and other kinds of goods used. I sold a ladder to someone for $45.00. I had the ladder for probably 10 or more years. The current new price on a comparable ladder is about $129.00 to $149.00. The buyer saved a lot of money and I used the ladder and got my money out of it in use.

Flea markets, yard and garage sales, thrift and consignment stores, pawn shops, auctions, Craig's List, eBay, local free classified ad tabloids, trade journals, etc. are all sources for just about anything you may need. The sky is the limit. Here is the secret. DO YOUR HOMEWORK!

Yes! You can buy someone else's headaches, heartaches or trash if you don't know what you're buying. Before you go shopping know what you're shopping for. If it's a refrigerator, know the brands. Know what size you're looking for, know what features you want (ice maker, automatic defrosting, etc.). You should do that with anything you're planning to buy, new or used . . . well, except maybe for a pack of gum.

You'll find brand new designer clothes with the new labels still on them in hospice, Salvation Army and similar thrift shops. You'll find new, designer items ranging from clothes to personal accessories, back packs, purses, etc. on eBay. You'll find records, CD's, DVD's, etc. on eBay and other sources. Whatever it is, you'll find it. Someone has bought it and may or may not have used it and is selling it.

People will buy things on the Home Shopping Network and QVC, receive it and decide it isn't what they wanted. They'll return it. HSN and QVC can't resell the items as new, even though they actually have never been used and are virtually new. They'll put the items in their “outlet” stores. EBay and similar entrepreneurs will go to the outlets and buy up batches of these items and then sell them on eBayand other places for half or less than price they were selling for on HSN or QVC. They are classified used, but they are actually new.

So, how does this all make your life simpler? If you can live well, have everything you need and save thousands of dollars, perhaps even tens of thousands of dollars, each year, would you be able to save more money for the future? Could you possibly get along on a single income rather than two incomes if you're married with a family? If your lifestyle doesn't cost as much as buying everything new, could you leave the job you don't like or enjoy and do something you would rather do, even if it paid less money? There may be a nominal learning curve. But, I can assure you, ask anyone, who has incorporated this concept of buying used into their lifestyle, if it is complicating their lives. I doubt you'll find many who will say it does.

The Bottom Line

Saving money, buying right and reducing the amount of time you have to work to enjoy a comfortable lifestyle makes life simpler in just about anyone's book. So, Tip #30 in the 52 Weeks to a Simpler Life series is to learn how to buy just about everything you can think of used, and save money.

If you approach this concept from the correct perspective, you'll find it's actually more fun than traditional shopping. Isn't that what we want life to be? Fun?

By the way, I'm composing this article on a Lenovo computer that had an original price of about $1,600.00. I bought it used on eBay for $325.00. I did have to put a new hard drive in it and buy a set of recovery disks from Lenovo, though. That was about a year after I bought the computer. Total cost? Less than $100.00. So, I'm using a $1,600.00 computer for $425.00 and I'm now in the third year of using this computer. And, all the technology in the computer is still (believe it or not) current technology. Tell me buying used isn't a way to make my life simpler, better and save my hard earned money.

Life free and be happy. EH