Personal Expenses Mangement - Eight Things You Should Not Buy New
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I think every one of us harbors secret shopaholic tendencies. But staying out of debt means spending less than you earn. And that means spending smart and personal expenses management. To help you on your smart spending journey, Mint has come up with a list of eight items that no matter how tempting, you shouldn’t buy new.
- CDs and DVDs: With iTunes, Netflix, and speedy CD-burning technology, it doesn’t seem like anyone even needs to buy new CDs or DVDs anymore. There’s no shortage of online retailers that sell used CDs and DVDs for reasonable prices, including amazon.com, secondspin.com and half.com. Sites like deepdiscount.com or dvdplanet.com sell new DVDs for much cheaper prices, some as low as $5, with free shipping. Brick and mortar stores also sell used CDs and DVDs. Ilike Amoeba, the world’s largest independently owned record store; but, unfortunately it’s only located in the Bay Area.
A frequent movie watcher? If you rent or watch movies frequently, you might want to consider online rental memberships; when compared to retail rentals and movie theaters, it can save you hundreds over the year.
Rent online! Sign up for Netflix or Blockbuster if you’re a frequent DVD renter.
- Netflix 3 DVD
- Over 75,000 titles and no late fees.
- Sign Up
- Blockbuster
- 3 DVDs at a time by mail & free in-store rental.
- Sign Up
- Books: I can’t tell you how many books are on my shelves that I bought new, read once, and never looked at again. There’s even some I never read. The usual suspects (amazon.com, secondspin.com, and half.com) will carry cheap used books, as will sites like bookfinder.com or abebooks.com. And there’s always the library. Libraries offer access to online versions of their books and audio books. Your librarians miss you; just beware of late fees!
Mint’s Tip: Watch for online bartering sites that allow you to trade items with other people for free. Sites like peerflix.com, switchplanet.com, and barterbee.com allow you to trade things with people all over the world.
- Apple Products and Electronics: There are a number of online resellers of refurbished apple products like iMacs and iPods. This means that with minor aesthetic or mechanical repairs, the product is as good as when Steve Jobs first demo’d it. It just costs less. Apple stores sell refurbished products, as do online retailers like Small Dog Electronics. Some people warn against buying used electronics, but I have two refurbished Macs at home and have never had a problem. Try to get full-disclosure about a refurbished model and you should be fine.
- Designer Clothes: You may be surprised to see designer clothes and budget in the same sentence. Sites like celebclosetraiders.com and vickissecret.com sell used designer and consignment clothes. CelebClosetRaiders.com raids celebrities’ closets and sells what they no longer want, like a dress Paris Hilton wore on MTV’s TRL. Fashion Under $100 is an innovative blog that finds cheaper versions of celebrities’ outfits. Other sites like bluefly.com offer new designer clothing at discounted prices. An even cheaper practice is to buy designer lines that are specifically produced for retail chains. Vera Wang, known for $10,000 plus price tags, recently brought an exclusive line to Kohl’s. Target teamed up with designers like Isaac Mizrahi and Cynthia Rowley. And J.C. Penny has teamed up with Nicole Miller, making great design available at realistic prices for the first time.
Mint’s Tip: People tend to think the more money they make, the more they should spend. Instead of paying $80 for a pair of jeans, they’ll shell out $200, just for the name brand. Mint suggests you stay loyal to the brands you liked on your way up, and put the difference into a high yield money market account (just like you should be saving your raises, bonuses, and other financial windfalls).
- Baby and Maternity Clothes: No one should pay $50 for designer jeans for a toddler, right? In one year, a newborn triples its weight. The next year, he or she gains 3 to 5 pounds. Age three brings 4 more pounds. Growth continues until they are old enough to buy their own clothes! Instead of wasting money on clothes they will quickly outgrow, opt to buy clothes from sites like gently-used.com or babyloot.com, and encourage doting family members to do the same. Then, invest the difference in a college savings account for your child, like a 529 plan. The money will grow tax-deferred and future distributions come out federally tax-free. A gift like that lasts longer, and means more for your child’s future, than any outfit.
- Games and Toys: How many times have you played Monopoly since you bought it last year? Twice? Amazon.com and ebay.com have lots of games and toys to choose from, generally with cheaper prices than retail stores. Ebgames.com and gamestop.com offer large selections of the most popular games, as well as the classics — both in new and used prices.
- Homes: Unlike cars, homes can increase in value if you update and improve them. But older properties may need expensive and weekend-consuming repairs. That’s why these properties often cost less per square foot, and why you might be able to get more home for your money. Decide what’s right for you based on your time, skills and patience for home renovation, and on factors like location, price, neighborhood, safety, amenities, living space, taxes, and school district. Sites like the Department of Housing and Urban Development, newbuyer.com, and MSN Money are good sites to start with if you are considering buying a home.
- Cars: New cars depreciate drastically. Unlike with a house, they won’t increase in value. As soon as the tires hit pavement, it’s only worth the wholesale value. Then it drops 15-20% per year for the first three years. At that rate, a $12,000 automobile loses $5,400 in three years! Plus it will cost thousands per year in gas, maintenance, and insurance. It makes more financial sense to buy a used car. You’ll get more for your money. Read more about new car and used cars from a previous post: A Young Professional’s Car Buying Guide.
Angie, excellent suggestions. I think I follow every one of them with the possible exception of Apple products
Aaron
Thanks Angie. I’ve been a newbie for a while but you’ve enlightened me on some alternatives. I’ll definitely keep this in mind next time I take out my wallet for a purchase. Any ideas on restaurants or second hand bottles of wine?
Check your RSS feed. They all show up as #1
The Fashion Under $100 site is a pretty neat one, although I personally still shop at Ross, T.J. Maxx, etc. Yup. I’ll admit it!
Bobby: Thanks for the notice! It loads fine for web-based reader such as Bloglines, but I checked the feed against other RSS readers and sure enough, it looks like there were some errors in the formating.
Anton: Not sure about second hand, but Woot Wine appears to have bottles of wine for cheap. Similar to its parent retail site, Woot.com. If anything, there’s always great product discussion for the selected bottles.
Don’t forget your local thrift store for toys and games. Also - I love http://www.bookmooch.com for books. I send folks the books I never read - and get sent books I actually want without any money changing hands (well.. I have to pay for postage - but that’s it).
My dad was a mechanic and always bought really, really used cars. I bought a few used cars at first, but several of them died - so I bought a new car. Its a Chevrolet Aveo. Would I do it again? Maybe not. But it wasn’t that bad. Our second car was used however, and it seems to be pretty good as well…so in the future I will probably buy “slightly used.” The problem is going with the stuff that is really used.
My tip:
Check out eBay for deals on electronics & other expensive items. I’ve saved hundreds of dollars at a time buying various electronic items from eBay vs. paying for it at a retail store. I would, however, also recommend buying from seller’s w/reputable feedback on the site. In other words, don’t buy a laptop from someone with zero feedback;-)
I agree with most of the points made by the author except the point about cars. The author does not take into consideration cost of maintaning and repairing a used car. If you do buy a new car and are not too particular about having the latest model every few years buying a new car and driving it, till it dies saves on an average $20,000. The used though being cheaper does not have the same time period and the user will eventually have to buy another car and go through the same costs again. Extended warranty (not from the manf.) will further increase the life-cycle of the new car.
Excellent ideas. Another good site to trade items is titletrader.com. :}
Dave:
You’re kidding, right? The average car payment in the US is $378. That’s $4536 a year.
A reliable used car can usually be maintained for less than that.
Buying new cars just doesn’t make sense.
And extended warranties make absolutely no sense.
Buy a used car and save the car payment. That’s what rich people do.
this is a great article with some awesome tips. Just wanted to mention that there is an Amoeba in Los Angeles too…and I used to live in Portland and we had tons of music stores like that, so I am sure almost everyone could find one in their city.
Michael Knaply:
You are missing the point of using the new car until it completely dies out therefore saving you the cost of buying another car again.The used car you are going to buy will not last the length of time. This is assuming you do buy a reliable model.
For books, dvds, cds and video games, http://www.swaptree.com is the way to go. Free easy and simple.
@Dave:
I think you’re missing Michael’s point.
You could buy a new $20k car and use it for 10 years…
Or you could buy a 3 year old model of the same car for $11-12k and use it for 7 years.
Oversimplifying a bit, the cost of a new car over the period of ownership is $2k/ year, vs $1.6-1.7k for the used car.
The value of this strategy is especially obvious if you compare owning a new car for 7 years (more realistic than 10) with buying a 3 yr old car and using it from years 4 through 7. In this case, the impact of maintenance costs on the calculations is lower.
My experience suggests that of the total maintenance received by a car over 10 years, the first three years accounts for <10%, excluding regular oil changes and similar. The next 4 years account for maybe 30%, with the bulk of the maintenance required later in the car’s life.
So if you can verify that the car’s condition is pretty good, the used car is a better value, hands down.
Sam is right, but Dave’s idea is a good alternative.
The key is not in either case to let depreciation work
heavily against you. Whether you buy new or used, a car
is a wasting asset. In my family, we have 2 examples of
Sam-ing and one of Dave-ing.
Dave example — 2001, bought new Honda Accord — Value
package, about 1,200 below MSRP in a slow week in July.
Cost, including tax, $18,500.
Repair costs to date — $420, set of new tires. Now
at about 60,000 miles.
Maintenance costs, other than oil changes — about $600.
Car still has a good 100,000 miles of life in it.
Cost so far, $271/month. (Paying cash and holding on
working pretty well.)
Sam #1 example — Van, 1993, bought used in 2001 — $8,200
(including tax was 8050 to the dealer, and $150 for a bear
of an inspection by an independent garage that brought my
purchase price down a few hundred).
Extra expenses — set of new tires, $460; new muffler, $170, 100,000 tuneup with timing belt and water pump, $1,200.
Total — $10,030, or $139 per month. Van currently at 120,000
miles, I’d guess there’s another 60,000 miles left in it.
The last example is really odd — a 4 year purchase of a pickup 10 years old but low miles when we bought it. I’ll skip it, except to say that as of today the cost per month of
acquisition and maintenance is lower than the cost per month
of insuring it for my teen-age son to drive it.
So I’d say Dave’s idea about how to get good value from a new car is right, but Sam is more correct about keeping costs low overall.
[...] money may just happen to be green too, and vice versa. This is really proven by Mint’s post Eight Things You Should Not Buy New. It is a great post, but I could add more to it…for example, in the books section, I [...]
If you are buying a Refurb Apple product be sure it is Apple Refurbished & sold by an authorized Apple Retailer, so it carries a full one year Apple factory warranty. Check http://www.PowerMax.com &
http://www.SmallDog.com and of course look for the refurbs at the online Apple Store too. (Special Deals are at Lower left side of Store page).
http://store.Apple.com
[...] recent excellent post points out eight things you should not buy new. The site goes into a lot more detail, so is worth [...]
i have always bought used cars (newer used ones) that skip the major depreciation early years with lower miles. I buy from private individuals and buy dependable models. I get them inspected before purchase and can say that I have had a great experience doing this. in fact, i am still driving a 1992 honda accord with 220k miles on it. i also utilize my local library for all books (except the rare case where a book will be be a good reference that I want to own) and movies. In essence, I use public resources for everything from swimming to free learning lessons. New technology is overrated usually and requires a premium. i always buy used or refurbed. but, i can fix most problems that come my way.
Always check eBay. We just built a new home and were able to find all kinds of things on ebay for half price or better. Every sink and faucet was from ebay and even things like wire for the range and stove. What is scrap to one person is enough to do the whole job for someone else. This goes for new homes or fixing up older ones. If you can plan ahead and wait a week to get what you need, you’ll save big.
In regards to point #1, buying used is good, but you can always buy new, rip the CD to your digital collection and then list it on Amazon.com or Half and get most, all or even more than you paid for the CD originally. I did this with my whole collection of CD’s and reaped a nice $3,500 over the course of a few months. I did have about 400 cd’s, but in many cases, I bought used CD’s from the local used CD store for less than what I was selling them for on Amazon. Music genres have major and minor influences depending on location, so if you have it and they can’t find it locally, chances are they will be paying more for it than what you got it for. Just thought I would share what I did. Also, for Books, give http://www.bookins.com a try. Great book swap site, not a huge collection yet but it’s increasing. They are also starting DVD swapping soon.
I agree with almost all of your suggestions…except the part about Apple products!
Used iPods are fine with me and probably with anyone else who doesn’t really want to ruin their eyesight squinting at a 2″ version of The Office. But I hate getting a used computer with the AppleCare half used up. Great suggestions though.
@ Bryan
You do know that what you are doing is stealing, right?
Great article! Thanks.
1) It’s illegal to sell a CD after you’ve made a copy of it? This is a serious question. Was it illegal to sell an LP (that’s a record, people) after you made a cassette tape of it? Again, not sarcastic, just curious.
2) Angela, someone may have said this and I missed it (skimmed), but we have an Amoeba in L.A. now, too. Maybe there are more? Anyway, there are independent record stores everywhere, selling used CDs (and maybe breaking the law?) for a fraction of the cost.
Yes, there is an Amoeba in L.A. Shame on me for not doing my homework! And there are tons of other indie record stores out there with great deals on new and sued cheap CDs, DVDs, records, etc. They’re especially great for obscure music.
I don’t know about the legality of copying and selling CDs. If I really like an album, I’ll buy it. I have no problem supporting a singer or band that I enjoy. I have on occasion received burned CDs from friends who wanted to share some of their music with me—kind of like a mixed tape…
I clicked on Blufly and went to shoes. The first pair I saw was $237-ouch! Why not recommend Zappos?
Good point scout. I listed Bluefly because it technically has cheaper “designer” clothes, shoes, etc. However, Zappos is by far better for the rest of us. I also always check Amazon just to see if they’re cheaper than Zappos.
There’s tons more I’d add. Other readers mentioned some: eBay, Swaptree, Bookmooch, and Bookins, among others. I would also add freecycle and craigslist… anything else?
I will never buy a brand new vehicle again. They depreciate as soon as you drive them off the lot. Certified pre-owned is the way to go!
Can you send me a list of the websites you outlined in your article and your responses.
As a young mom (meaning I’m new to motherhood, not that I’m young in age), I was interested in the sites that you outlined for used maternity clothes and baby items. I do think that there’s a lot of potential for the market but with shipping and handling costs, it doesn’t seem to be very practical right now.
My husband and I recently came up with the idea http://www.happyloaner.com which allows you to borrow items from friends, acquaintances or people in your general community. I found that people had become loath to loaning out items–we lose track of our things and never get them back. Happy Loaner is a very simple way to track items and sends an email reminder to both parties when the item is due back based on a date you’ve determined.
Good post. This list is made for someone trying to get by by spending less. Thanks.
Used cars are clearly the way to go, in terms of sheer value for your money (and lowering your environmental footprint). My problem is that I can get 0% financing on a new car and only 7.5% on a used car, so it seems that the new car will actually be less per month for me. Am I missing something?