Friday, 7 March 2014

Don't be afraid of second hand goods

I recently moved out of home and set up my apartment.  I posted tips on how you could do this without breaking the bank.  I had a goal of $2,000 to set up the whole apartment (excluding bedroom furniture which I already had) and in the end I spent ~$1,500 (which surprised me).  I managed to do this because a lot of the goods I purchased were either a) second hand or b) non branded.

When I mentioned this story to a lot of friends who are getting married or moving out and setting up their own place for the first time I got one of two reactions.  Either

  1. Great!  Tell me how you did that and how do I find good stuff? or
  2. You bought second hand goods?!  I could never do that!  
I've already told you how you can save money setting up a new place but in this post I am going to tackle the snobbery (for lack of a better term) that some people have when it comes to second hand goods.  

Now let me preface this by saying that if you have a ton of money and have no real need to budget and there is nothing than you are saving for then you're probably going to get nothing out of this.  However if you are like most people the chances are that moving into your own place for the first time (especially if you've just had the expense of a wedding and honeymoon) cash is going to be a little bit tight and setting up your whole house is going to be a little bit of a challenge.

What is the point of putting yourself into debt?

The common answer for  many people is to buy the things they need on credit or with other forms of debt.  I think this is crazy - you end up paying an increased cost on a depreciating asset and the chances are that in this initial phase of setting up your house you're going to be compromising in quality anyway and you're going to be replacing it later.

Even if you have cash to pay for these goods you need to think of what the next best alternative for this cash is.  If you have just bought a house you are not using the cash to pay down your home loan and so are effectively incurring interest on these purchases.

Start slow...start second hand

There is a real argument for kitting your house out with second hand goods in the initial instance and then over time replacing it with the top quality furniture that you desire.  It will place less financial pressure on you when you start out and you can replace the things with better quality items once your budget allows for it.

The only way I kept to my $2,000 budget was with second hand goods - if I had spent $1,000 on my lounge suite there is no way I could have kept to my budget.  In next years budget I can look at replacing some of my older items with new items...but for now I have functional items that work.

Second hand goods can be very good quality

People often equate second hand goods with lower quality or a lower prestige level.  Oddly enough if you put the word 'antique' in front of something - people are actually willing to pay a premium for second hand goods.

Second hand goods do not have to be poor quality.  You can still pay a lot less than new products and get something that looks great.  I got a hand crafted leather Italian lounge suite in perfect condition for under $500.  It looks incredible and I don't have to tell anyone that I bought it second hand if I don't want to.  

I would actually avoid poor quality goods like the plague because they cause more problems than they are worth - especially electronics.  Do not use a  poor quality $50 fridge (they are out there) - you'll just end up paying a lot in electricity bills and also to get rid of it when it inevitably dies.  Stick to high quality second hand goods for most things and you can save a ton of money.

Try to get rid of the 'snob' value of new goods

Going down the 'prestige' route with any sort of purchase is a great way to spend far more than you originally wanted to.  From fitting out your house, to cars to fine wines - anything with a greater snob or prestige value will take money out of your wallet.

I will do another post on this in the coming weeks but think about who benefits from this snob value.  If you manage to get out of the mindset that new = "the only way to go" you can save a lot of money when fitting out your house.  I did it and it saved me thousands of dollars - and I'm proud of the way my apartment looks and feels.

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