Buying Used is Smart in Any Economy

All Things Financial

Volume 17 No. 3, March 2011
By Charles P. Jones, CFP®

Even with hopes for a better economy in 2011, some habits learned in tough times could stand to become permanent ones. A good one might be continuing – or starting – to buy particular categories of merchandise that are used but still in good condition.

If it makes you feel better to use the term “pre-owned” or “classic” by all means do so. Expertise in a particular product category can matter a little or a lot. But here are some types of merchandise where buying used can be a very good idea:

Cars: Granted, used cars are not for everybody. Mechanical skills are a plus if you have to evaluate whether your driving habits would be best-served by an older model with some mystery under the hood. But a low-mileage, well-maintained car coupled with dealer guarantees or access to car knowledge (or at least a really good, honest mechanic), can pay big dividends in the long run. First, depending on the model and age, you might be able to pay cash. Second, the right used car can be an extraordinary value when compared to a new car treated with similar kid gloves. Third, as second vehicles primarily used for short trips, a good used car can’t be beat.

Books: Granted, the world is moving into the age of the e-book, but there’s plenty of old-fashioned reading material that can be had for a song. Public libraries often sell both donated hardback and softcover books to raise funds at extraordinarily low prices, and retail chains have surfaced that actually sell used books at a fraction of the cover price. Certain Internet retailers also carry used books right alongside new copies of the same title.

Recorded music: Whether you prefer your music in CD or vinyl form, you can scout Internet retailers, flea markets and half-price stores for titles to add to your shelves or your Mp3 player. As long as you’re willing to wait a few weeks or months for a desired title to come out, you’ll find great bargains, and if you’re simply looking to replace favorite old albums that have gone to their reward, used is always a good idea.

Furniture for the home and office (particularly the office): Solidly built furniture is always an attraction – you can always call it an antique. But one of the best deals you can get in a down economy is office furniture, particularly if you check local resale shops or classified listings in print newspapers and online. It’s also easy to post specific requests for dimensions and features online as well. And even if you end up buying scuffed-up or dusty chairs, you’ll be stunned at what a little automotive tire cleaner can do to renew the look of office furniture made from rubber or plastic.

Toys and clothes for infants and toddlers: As long as you can clean them properly, these two categories of must-haves for kids are just fine bought second-hand. First, kids of any age outgrow clothes quickly, but used toys can work particularly well for younger kids simply because they haven’t become totally hooked on commercials. Until the pull of consumerism takes over – and for as long as you can manage afterward – buy used as long as the items are safe and can be thoroughly cleaned. Also, buying used is not a bad first money lesson for kids to adopt – encourage them to buy used toys and games as a way to get more out of their chore and allowance money. As long as you can clean them properly, these two categories of must-haves for kids are just fine bought second-hand. First, kids of any age outgrow clothes quickly, but used toys can work particularly well for younger kids simply because they haven’t become totally hooked on commercials. Until the pull of consumerism takes over – and for as long as you can manage afterward – buy used as long as the items are safe and can be thoroughly cleaned. Also, buying used is not a bad first money lesson for kids to adopt – encourage them to buy used toys and games as a way to get more out of their chore and allowance money. That’s a good habit that can last a lifetime.

Precious jewelry: Most of us don’t own the kinds of precious metals and stones that increase in value. In fact, most retail jewelry is sold at huge markups that rarely come back to the owner when they sell. The smart thing is to buy used and to get over any aversion you might have to shopping pawnshops or resale shops. Ask the vendor if they will return your money in 24 hours if a certified appraisal doesn’t satisfy you. Keep in mind you can buy used stones and settings as well.

Sports equipment and musical instruments: Whether your kid is learning to golf or play guitar at 10 – or if you’re trying it for the first time at 40 – always start with used equipment that can last a year. If you or your son or daughter proves to be the next big rock star or champion of the PGA Tour, you can always upgrade to newer, high-quality equipment later. But lots of money can go down the drain between the words “I want this!” and “I hate this!” – so by all means, buy used first.

Game consoles and electronics: Doesn’t it seem like the latest camera, game system or other hot gadget becomes obsolete every few months? Depending on your interest, that can be very true. So the trick is to consider whether you can live with a year-old Wii or a digital camera with last year’s technology. A lot of people can’t and put nearly-new equipment up for sale. Their addiction to the newest and hottest can work out very well for you.

January 2011 — This column is produced by the Financial Planning Association, the membership organization for the financial planning community, and is provided by Charles P. “Chuck” Jones , a local member of FPA.


WORKING? You are still working for Uncle Sam.

According to the Tax Foundation, Tax Freedom Day took place last year on April 9th, 2010. This means that on that day, Americans had earned enough money to solely pay off their total tax bill for 2010. We were required to work 99 days—or 26.89 percent– of the year for the government while having the remainder of the year to pay for everything else. The Tax Foundation will be releasing the 2011 date on March 30th. It is likely it will be later than the 2011 date due to the expiration of the Bush tax cuts this year.

Source: taxfoundation.org

Remember all the deductions:

Your CPA or tax preparer is the best source to make sure you get all the deductions you deserve.

For example: Health insurance costs may be part of the medical expense deduction depending on your situation. If it does fit your situation this deduction is considered an itemized deduction and medical expenses are deductible only to the extent they exceed 7.5% of your adjusted gross income. Or did a relative move in with you? You may be able to claim them as a dependent. Ask, but let your tax preparer make that decision.

But you get 3 extra days to file your taxes in 2011

2010 taxes. The federal return deadline will be Monday, April 18, because this year, Emancipation Day – the anniversary of President Abraham Lincoln’s 1862 signing of the Compensated Emancipation Act – is being observed on April 15. The holiday will be celebrated one day early because April 16, the actual date, falls on Saturday.

That prompted the IRS to extend the tax filing deadline to April 18 this year. Under the tax code, filing deadlines can’t fall on Saturdays, Sundays or holidays.The last time an extension was granted for this reason was in 2007.

(Source: IRS www.irs.gov)

Filing and extension? You still need to pay by April 18th

You have up until the April 18 deadline to contribute to an IRA.

If you are not going to make the April 18 deadline, file for an extension. You will get an extra 6 months to file (to October 18, 2011). But remember, an extension to file is NOT an extension to pay taxes. If you owe money, you will need to pay your tax bill by April 18, or face penalties.

Note: Chuck Jones is not a licensed tax preparer. Comments made herein are not designed to be individual recommendations. Always consult your CPA or licensed tax preparer about your individual tax situation.


“If wishes were horses, beggars would ride.”
Old English proverb

“Wishing of all strategies, is the worst.”
Andrew Young

“What makes the difference between wishing and realizing our wishes? Lots of things, and it may take months or years for wish to come true, but it’s far more likely to happen when you care so much about a wish that you’ll do all you can to make it happen.”
Fred Rogers

Thank you Mr. Rogers, we agree.

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