The Mind of Value
A frugal mind and a cheap mind are two completely different machines. On the outside, they may seem the same from time to time, but that is merely an illusion. A cheap mind is one that only looks to spend less money, often accepting lower quality in exchange for lower costs. This can be found in the man that buys boots for $10 that only last a single month. A frugal mind is one that challenges the true value of money. This can be found in the man that spends $60 on boots that last for a year. In a way, being cheap is like a narrow and more oblivious manifestation of the same goal that being frugal is founded on: get more value with less money. In the above example, the frugal mind’s dollar is twice as valuable as the cheap mind’s dollar.
The Fundamentals of Buying Used
Buying new versus buying used is a prime example of making a dollar more valuable. When buying new, costs are seldom a reflection of the item in question. For example, brand name food in grocery stores often costs more because of the advertising budget of its producing company. However, food does not have a resale value. Once it is used, it is gone, and that is exactly what creates the market for generic brands and discount stores.
But there are used items that are perfectly reusable and have little competition. Musical instruments often cost far less used than they do new. If a guitarist were to buy a guitar and play it for six months, the guitar has already served them well. A $1000 guitar sold after six months for $800 effectively cost the guitarist $200 over 6 months or about $33 dollars per month. They get the value of a $1000 guitar for half of a year for 20% of the cost. The guitarist, though, isn’t the only winner in this example. If it is in great shape, there’s no reason that someone wouldn’t want to buy it used and save $200. The buyer gets a great guitar for a significant amount less than the cost of buying new. This type of scenario happens every day with cars, boats, skateboards, pianos, books, desks, air conditioning units, furniture and a plethora of other examples that apply to virtually anyone in any city.
Being the buyer in these situations does come with its dangers, but a smart shopper will be nearly immune to them. The most important aspect of buying used is inspecting the quality of what’s being bought. If someone had a used car for sale for $100, but advertised no refunds and no test drives, it’s safe to say that most smart shoppers would avoid it. If the seller does not offer a thorough inspection, it should be an immediate warning sign for the buyer. Sellers that are happy to provide time to inspect the item are demonstrating trustworthiness, but that does not mean that the item is worth buying. For example, a seller may allow buyers to inspect and test drive a car in the winter and try to avoid mentioning that the air conditioner doesn’t work. This is why both inspecting and knowing what to inspect have a very real financial value. If a buyer were to ask about the air conditioner and get another $100 taken off of the price, their ability to inspect and ask questions is literally worth $100 in the situation.
Bringing it Together for Financial Freedom
An honest evaluation of what it means to be financially free can bring a person closer to happiness. Financial freedom is not about having a lot of money, though that is both a part of it and a worthy goal. Financial freedom is about being able to buy what is needed when it is needed. This is where being frugal, buying used, and financial freedom converge. Someone that buys used because it is cheap has not fixed the underlying problem that destroys their chance of wealth. Someone that buys new because they assume it is more valuable has not necessarily made the most valuable decision. Someone that assumes that financial freedom is having a million dollars to spend may never experience the inner revolution that comes with being able to forget about money and be happy.
The mind that seeks to make every dollar as powerful as it can possibly be is the mind that will achieve financial freedom. Buying used is not to be confused with being cheap. It is an expression of intelligence. Spending those 5 hours to research used items and eventually saving $300 has an effective value of $60 per hour. The secret to financial freedom lies in the wisdom of frugality.
Jamie Kim is a freelance blogger, writing on behalf of the team at kelcreditrepair.com to remind the importance of maintaining the health of your credit, even as college students