No matter how good you are at saving money, I can almost guarantee that all of you have made a purchase, whether it be out of impulse or necessity that quickly becomes redundant in your household.
This doesn’t mean to say that the purchase was a waste of money, it simply means that the lifespan of the particular item was short lived. While one moment you may have needed and had a use for it, the next minute you have something taking up space and collecting dust with no purpose whatsoever.
Such is the materialistic lifestyle I guess.
Today I wanted to discuss the importance of assessing what you do and don’t need in your household on a regular basis; the goal is to quickly distinguish items you no longer need so as to sell them before they lose any more value and recover as much of the money you outlaid as possible.
Every second you own something it is losing value. The trick here is to be ruthless, assess regularly and find ways to recover money that is tied up in products you no longer need.
By selling your used items quickly, for a good price, you are subsidising your original purchase price
Consider this for a second as it will change the way you look at items you need to buy, especially ones that will soon serve no purpose after a given date (think children’s toys, cots, strollers or even things you need for an event or party).
The goal is to recover as much of the original dollar you spent, in turn subsidising your original buy price. You may have spent $300 on a stroller, but if you get back 60 cents in the dollar, you will receive back $180 when you sell it second hand – making your original buy price only $120 for a $300 RRP stroller.
This means that things you buy are slightly cheaper than you first anticipated. You can begin to see short lived items as cheaper than they actually are as you can count on achieving some sort of resale price that will put part of the original investment back in your pocket.
A real life example of subsidising a purchase by selling once no longer needed
We purchased a stroller back in 2013 for around $450 including a capsule that can be used with the stroller + in the car. The capsule and stroller were fantastic and gave us about 10 months of use before it became too bulky and big to use anymore.
We then purchased a new, lighter stroller for everyday use and it quickly become the only stroller we used. We now had a redundant stroller and capsule taking up space in our study.
After a month of it sitting there, I finally bothered to take some photos of it and prepare it for sale. In my head I would have been happy with even $100 given I really didn’t need it anymore and I was annoyed at how much space it was taking up.
I took some photos on my phone, used an app to make a four picture grid (to showcase all angles in one photo) and then gave to my wife who posted it on all of her mothers group Facebook pages.
30 minutes later, it was sold for $200. Twice the amount I originally wanted for it and with someone coming to pick it up in 4 hours.
I wish I could’ve gone back in time
When I first purchased the stroller, $450 was a lot of money. I was broke with all the baby buys I was making and I wish I could have realised back then that one day I would achieve a resale price that would actually make my purchase nearly 50% of what I spent that day. I wish future me could have told past me that it was all going to work out and I would be saving money to the tune of $200.
Purchases rarely retain value once off the shelf
It’s wise to note that when you buy something, for instance a child’s stroller, the moment you walk out the door it is worth significantly less.
In large this is due to supply and demand and people expect to either pay full retail price for a brand new item; or next to nothing for a second hand item, no matter what the condition is.
It’s like an old joke my dad once told me. “If you want to have $25,000 – simply buy an Alfa Romeo for $35,000 and drive it out of the showroom.”
So while you may purchase something you need, you must remember that almost instantly after buying it, it will be worth less.
In saying that however, it’s still going to be worth something as I stated above with the real life example.
It’s better to convert wasted space into cash
Storing items in your home is costly. Everyday you keep an item you no longer need, its value goes down, your amount of free space at home goes down and you will quickly find yourself cluttered.
The moment you don’t need an item, you should actively pursue selling it online. You can do this through eBay, Gumtree or a range of other networks that can be found locally on Facebook.
Your goal is to retrieve as many cents on the dollar as possible to actively reduce the buy price you once paid.
If you need the motivation to find items to sell, check out our list of things to sell when you need money.
The sell now or keep for later debate
So in keeping with the above examples, what if you were thinking about having another child, would you indeed keep the stroller for another 2-3 years until the next baby was born? Or should you simply sell now and re-purchase later?
Unless you were genuinely going to need the product in 6 months or less, in my opinion, it is always better to release the cash caught up in a product so as to free your cash flow and put the money in your savings account or onto your debt to save interest.
Further to this, odds are that you requirements for a product will change, so what is good for you now, will likely not be good for you in a few years. Best to hedge your bets and sell the item now, retrieve the money and invest it ready for use later on to re-buy the item if and when you have to.