21 Things You Should Never Buy New

[original URL: http://finance.yahoo.com/news/21-Things-You-Should-Never-usnews-2356162080.html?x=0]

Wise Bread, On Monday June 28, 2010, 10:24 am EDT
 

If you're looking to get the most value for your dollar, it would do your wallet good to check out secondhand options. Many used goods still have plenty of life left in them even years after the original purchase, and they're usually resold at a fraction of the retail price, to boot. Here's a list of 21 things that make for a better deal when you buy them used.

1. DVDs and CDs: Used DVDs and CDs will play like new if they were well taken care of. Even if you wind up with a scratched disc and you don't want to bother with a return, there are ways to remove the scratches and make the DVD or CD playable again.

2. Books: You can buy used books at significant discounts from online sellers and brick-and-mortar used book stores. The condition of the books may vary, but they usually range from good to like-new. And of course, check out your local library for free reading material.

3. Video Games: Kids get tired of video games rather quickly. You can easily find used video games from online sellers at sites like Amazon and eBay a few months after the release date. Most video game store outlets will feature a used game shelf, as well. And if you're not the patient type, you can rent or borrow from a friend first to see if it's worth the purchase.

4. Special Occasion and Holiday Clothing: Sometimes you'll need to buy formal clothing for special occasions, such as weddings or prom. Most people will take good care of formal clothing but will only wear it once or twice. Their closet castouts are your savings: Thrift stores, yard sales, online sellers and even some dress shops offer fantastic buys on used formalwear.

5. Jewelry: Depreciation hits hard when you try to sell used jewelry, but as a buyer you can take advantage of the markdown to save a bundle. This is especially true for diamonds, which has ridiculously low resale value. Check out estate sales and reputable pawn shops to find great deals on unique pieces. Even if you decide to resell the jewelry later, the depreciation won't hurt as much.

6. Ikea Furniture: Why bother assembling your own when you can pick it up for free (or nearly free) on Craigslist and Freecycle? Summer is the best time to hunt for Ikea furniture--that's when college students are changing apartments and tossing out their goodies.

7. Games and Toys: How long do games and toys remain your child's favorite before they're left forgotten under the bed or in the closet? You can find used children's toys in great condition at moving sales or on Craigslist, or you can ask your neighbors, friends, and family to trade used toys. Just make sure to give them a good wash before letting junior play.

8. Maternity and Baby Clothes: Compared to everyday outfits that you can wear any time, maternity clothes don't get much wear outside the few months of pregnancy when they fit. The same goes for baby clothes that are quickly outgrown. You'll save a small fortune by purchasing gently used maternity clothes and baby clothes at yard sales and thrift stores. Like children's games and toys, friends and family may have baby or maternity clothing that they'll be happy to let you take off their hands.

[See 20 Things You Should Never Buy Used.]

9. Musical Instruments: Purchasing new musical instruments for a beginner musician is rarely a good idea. (Are you ready to pay $60 an hour for piano lessons?) For your little dear who wants to learn to play an instrument, you should see how long his or her interest lasts by acquiring a rented or used instrument to practice with first. Unless you're a professional musician or your junior prodigy is seriously committed to music, a brand new instrument may not be the best investment.

10. Pets: If you buy a puppy (or kitty) from a professional breeder or a pet store outlet, it can set you back anywhere from a few hundred dollars to several thousand dollars. On top of this, you'll need to anticipate additional fees and vet bills, too. Instead, adopt a pre-owned pet from your local animal shelter and get a new family member, fees, and vaccines at a substantially lower cost.

11. Home Accent: Pieces Home decorating pieces and artwork are rarely handled on a day-to-day basis, so they're generally still in good condition even after being resold multiple times. If you like the worn-out look of some decor pieces, you can be sure you didn't pay extra for something that comes naturally with time. And don't forget, for most of us, discovering a true gem at a garage sale is 90% of the fun!

12. Craft Supplies: If you're into crafting, you probably have a variety of different supplies left over from prior projects. If you require some additional supplies for your upcoming project, then you can join a craft swap where you'll find other crafty people to trade supplies with. If you have leftovers, be sure to donate them to your local schools.

13. Houses: You're typically able to get better and more features for your dollar when you purchase an older home rather than building new. Older houses were often constructed on bigger corner lots, and you also get architectural variety in your neighborhood if the houses were built or remodeled in different eras.

14. Office Furniture: Good office furniture is built to withstand heavy use and handling. Really solid pieces will last a lifetime, long after they're resold the first or second time. A great used desk or file cabinet will work as well as (or better than) a new one, but for a fraction of the cost. With the recession shutting down so many businesses, you can easily find lots of great office furniture deals.

15. Cars: You've probably heard this before: Cars depreciate the second you drive them off of the dealership's lot. In buying a used car, you save money on both the initial cost and the insurance. It also helps to know a trusty mechanic who can check it over first. This way, you'll be aware of any potential problems before you make the purchase.

16. Hand Tools: Simple tools with few moving parts, like hammers, hoes and wrenches, will keep for decades so long as they are well-made to begin with and are well-maintained. These are fairly easy to find at neighborhood yard or garage sales. If you don't need to use hand tools very often, an even better deal is to rent a set of tools or borrow them from a friend.

17. Sports Equipment: Most people buy sports equipment planning to use it until it drops, but this rarely happens. So when sports equipment ends up on the resale market, they tend to still be in excellent condition. Look into buying used sporting gear through Craigslist and at yard sales or sports equipment stores.

18. Consumer Electronics: I know most folks like shiny new toys, but refurbished electronic goods are a much sweeter deal. Consumer electronics are returned to the manufacturer for different reasons, but generally, they'll be inspected for damaged parts, fixed, tested, then resold at a lower price. Just make sure you get a good warranty along with your purchase.

19. Gardening Supplies: This is an easy way for you to save money, and all you need to do is be observant. Take a look outdoors and you'll likely find such gardening supplies as mulch, wood, and even stones for free or vastly reduced prices. Used garden equipment and tools are also common goods at yard sales.

20. Timeshares: Buying timeshares isn't for everyone, but if you decide that it suits your lifestyle, purchasing the property as a resale would be a better deal than buying it brand new: on average, you'll save 67 percent on the price for a comparable new timeshare. If you're new to timeshare ownership, give it a test run first by renting short term.

21. Recreational Items: It's fairly easy to find high ticket recreational items like campers, boats, and jet skis being resold. Oftentimes, they're barely used at all. As long as they're in safe, working condition, they'll make for a better value when purchased used than new.

Lynn Truong is the co-founder and Deals Editor of Wise Bread, a blog dedicated to helping readers live large on a small budget. Wise Bread's book, 10,001 Ways to Live Large on a Small Budget, debuted as the #1 Money Management book on Amazon.com.

How to Plan For a Double-Dip Recession

[adopted from http://finance.yahoo.com/news/How-to-Plan-For-a-DoubleDip-usnews-2055778412.html?x=0]

Rick Newman, On Friday June 11, 2010, 3:13 pm EDT

The insurance company Aflac didn't lose money during the recession, and it managed to pare costs without any layoffs. But it did institute a hiring freeze, which could stay in effect until the economy looks a lot stronger than it does right now. Many of Aflac's customers are small businesses like construction firms and car dealerships, and until they see a big pickup in business and start hiring themselves, Aflac's own sales won't increase enough to justify more hiring. "For us to see a pickup in new sales, somebody else needs to start it first," says Aflac CEO Dan Amos. "Jobs are going to be very slow in coming back."

[Slide Show: 11 Ways to Prepare for a Double-Dip Recession.]

In the aftermath of the Great Recession, that seems to be the whole problem: Everybody's waiting for somebody else to kick-start a robust recovery. Consumers typically get the ball rolling as they boost spending on homes, cars, appliances, and other purchases that they put off during the downturn. But millions of consumers remain out of work or dogged by too much debt. Companies would start hiring again if they felt economic activity was heating up, but CEOs like Amos have their doubts. The weak hiring then creates a circular effect, reinforcing consumers' reluctance to spend.

If consumers and businesses don't get traction soon, there could even be another recession. The dreaded "double-dip" scenario seems unlikely: Moody's Economy.com, for example, says there's just a 23 percent chance that the U.S. economy will be in a recession six months from now. But other forecasts are gloomier, and there's plenty of economic trouble to worry about. Europe seems much more prone to a double-dip, thanks to debt problems in Greece, Spain, Italy, and other countries, and any pain there could hurt here, too. In the United States, meanwhile, the housing bust refuses to end, government stimulus spending will soon peter out, and a mushrooming federal debt is spooking investors. If the American economy is ready to stand on its own, it's sure taking its time getting up off the floor.

It would probably take a major financial shock--like a debt default in one or more European countries--to trigger a double-dip, which would be characterized by a pullback in bank lending (again), fresh corporate layoffs, panicky stock markets, and plunging consumer confidence. There's not much ordinary consumers can do to prevent that, but they can take steps to safeguard their finances and improve their options if the economy gets worse instead of better. Here are 11 ways to prepare for a double-dip:

Save more. It might sound obvious, yet Americans aren't doing it. During the worst days of the recession, Americans boosted their savings to about 5 percent of their disposable income, as they built (or rebuilt) nest eggs and rainy-day funds. But the savings rate has now fallen to 3.4 percent, and that's not high enough. Economists believe the savings rate needs to be somewhere between 6 and 10 percent, for several years, for the nation to rebuild all the wealth lost in the housing and stock market busts. That might sound high, but the historical average after World War II was about 12 percent. Few households today can match that.

[See 10 companies back from the brink.]

Make backup plans. Yeah, it's tiresome to keep asking what could go wrong. But don't assume that just because the recession is technically over, you're out of the woods. Employers still might be inclined to cut pay, reduce hours, and trim their staffs, and some companies remain at risk of going belly up. So make contingency plans for what you would do if you lost 20 percent of your income, or 50 percent. What would you give up? How would you cut expenses? Are there any drastic changes you'd be able to make to get by on a lot less?

Stay liquid. Your rainy-day fund won't do much good if you can't tap into it, or if you'll lose money by being forced to sell stocks or other investments. With interest rates on the safest investments extremely low, it's tempting to invest cash someplace where it will earn a higher return. But make sure you retain a cushion in case something goes wrong.

Get smarter. Once employers do start to hire again, they're going to be extremely selective since they've got a huge pool to choose from. The best way to distinguish yourself is through education and training that's superior to those you're competing against for jobs. Additional degrees, courses, and training certificates are one obvious differentiator, but you don't need to spend a fortune to gain an edge. Employers will also be impressed if you can grasp technology that befuddles others or show deep knowledge of the issues facing your industry. Just showing up and asking for a job won't cut it any more, especially if the economy takes another downward turn.

[See 7 new rules for getting ahead.]

Start something on the side. You might prefer to relax in front of the TV at night, but that's not much of a backup plan. Instead, you might do freelance or consulting work, start an eBay business, or build a Web site showcasing your skills and accomplishments. That way, if you unexpectedly lose your day job, you'll have a little something to fall back on. You might even earn some extra income or make connections that open new doors. By the way, insisting that you're not the entrepreneurial type is no longer an excuse: A huge range of services on the Web, many of them free, make it easier than ever to set up shop on your own.

Wait. You might be dying to replace your aging car or upgrade to a more comfortable home. But put it off a little longer if you can. Money spent on a home or car is hard to tap into if you suddenly need it, and higher monthly payments could become a noose on your finances if money gets tight. This might require unusual discipline since it's a great time to buy a home, car, or other big-ticket item. Interest rates on loans are near historic lows, and with buyers scarce, prices are down. The good news is that a weak economy will probably depress prices for a while. Interest rates are harder to predict, but many economists now expect the Federal Reserve to wait until mid-2011 to raise its own short-term rates, which often reflect the rates on consumer loans. So there's a good chance it will still be a buyer's market a year from now--when the outlook for the economy might be clearer.

[See 10 new things we can't live without.]

Resist the lure of cheap energy. Oil prices have been falling lately, along with the price of gasoline, heating fuel, and other types of energy. But don't get used to it. Energy prices are depressed largely because the global economy is weak, but there's a good chance they'll go back up whenever the economy strengthens and demand for energy increases. So if you do buy a new car, home, or anything else that consumes energy, factor in fuel prices closer to 2008 levels--when gas hit $4 a gallon--than today's prices.

Postpone retirement. You might be able to retire on schedule, but if you're banking on the current value of your home or investment portfolio, run the numbers and ask if you could still afford retirement if the value of your assets fell by 20 percent or so. That probably won't happen, but working another few years and adding to your nest egg can't hurt. Take consolation in the fact that many of your fellow Americans will end up doing the same thing--partly because they can't afford to retire, and partly because official retirement ages are likely to go up.

Downsize. If you're planning any big changes, think small. If you have to move for a job, for instance, you might be able to move into a new home with one less bedroom or a smaller kitchen than you're used to, while lowering your mortgage payment and energy usage. Buy a four-cylinder car instead of a six-cylinder; your 0-to-60 time doesn't matter as much as it used to. If you run your own business, ask your landlord for a rent reduction, look for cheaper space, or see if it's possible to set up your office in the basement of your home. Space is cheap for the moment. Take advantage of it.

[See what Washington needs to learn from Greece.]

Stop speculating. If you guessed right and put money into the stock market during the low points of 2009, congratulations: You caught an epic wave that led stocks up by more than 80 percent between March 2009 and April 2010. But that rocket ride was based on the expectation that a recovery was coming and that stocks had been heavily oversold, assumptions that are suspect today. It's impossible to predict whether stocks will go up or down, but it does seem clear that the conditions that produced a bull market a year ago no longer exist. And those nagging debt problems in Europe could trigger a panic with little warning. So if you're playing the market today, be prepared to lose what you gamble.

Don't count on the government. Washington rode to the rescue in 2008 and 2009, with bailouts, stimulus spending, and vast economic subsidies that kept the recession from being a lot worse. But there's a limit to the levers Washington can pull, especially as the federal debt mushrooms and legislators get nervous about deficit spending. And many strapped state and local governments are now being forced to cut services and raise taxes. That means there will be a lot less help from the government to jolt a weak economy in the future, which could affect anybody who's gotten tax breaks, extended unemployment insurance, a stimulus-supported job, or other government aid. Sooner or later, the U.S. economy needs to function without a government crutch, and that moment could arrive sooner than we want it to. So get used to it: You're on your own.