buying new vs used

Tweet from Chad Ochocino mocking fine received for tweeting during game

#85’s Bugatti economics…..child please

If money were no object we’d all buy new things.  New things are shiny, don’t have suspicious looking stains on them and generally offer the buyer the peace of mind that comes with something that has yet to be used.  It’s also hard to estimate the value that comes with owning something that has never called another human ‘master.’

Peyton Manning directs the Denver Broncos offense

Manning’s base salary is $15,000,000 this season….about $1m per game

Reality check: we are all not franchise NFL quarterbacks, oil tycoons or chaebol (Korean word for conglomerate families who own companies like Samsung, LG, etc.).  So there are things we just can’t afford unless they’re used.

I know that many people are turned off to buying used things.  My mom is TERRIFIED of buying anything that is not new.  And I can understand that.  She works hard and earns an income that allows her to buy most of things she wants new.  I, on the other hand, am a college student and covet many new shiny things that I can’t possibly afford to buy new.  So how do we get the things we want at a reasonable price without getting burned?

Canon Mark iii 5D DSLR camera

Canon Mark iii 5D DSLR camera

Like most financially related matters in life, its all about risk vs reward.  Yes, you can get that DSLR camera you wanted for half of the retail price, but it might not be under warranty.  The previous owner may lie about its condition.  There are many bad scenarios risk-averse individuals may envision when contemplating a used purchase.  The key is to minimize our risk by gaining as much information as possible before buying.

Let’s imagine two scenarios at opposite ends of the spectrum when trying to buy again let’s say a used DSLR camera.

Shady creepy looking man with sunglasses and facial hair

Psst…hey….you want a gently pre-owned Canon Mark iii 5D?

Scenario A: Random guy at the gas station comes up to and asks if you want to buy a camera.  It’s the model you want and he’s offering it for about 30% of the MSRP.

Scenario B: You look on eBay for the camera you want used, find a reputable seller with good feedback who provides lots of information and photos.  He/she takes time to answer all your questions.  You use PayPal to pay for the transaction.   The seller wants about 70% of the MSRP.

If you go with Scenario B, you end up paying more but there is much less risk involved.  On the flipside Scenario B it seems like a killer deal but the odds that the shady dude at the gas station is doing legit business – probably nil.

Summary: You may not have the money to buy the things you want new, but if you have the time and patience to do your homework, you can own those awesome consumer products you want at a fraction of their retail price with very little risk that they will be faulty or problematic.