It's no surprise that the overwhelming majority of frugal folks I surveyed for my new book, The Cheapskate Next Door, prefer to pocket the savings by buying something that's "previously owned" — but still in good condition — whenever possible. More than 90 percent of the self-described cheapskates I polled said that they favor buying used items over new.
While it can make good financial sense to buy used goods — thereby letting someone else pay for the loss in value when an item magically goes from "new" to "used" — the key is to find items that are used but not abused, as I like to say. Here's some advice on how to find used items that are truly bargains, and when you're better off buying new:
Cars (advantage: used). The smart money is on buying used vehicles and avoiding the notoriously high cost of front-end depreciation. According to Edmunds Inc., a new car can lose up to 20 percent of its value the minute you drive it off the lot and 30 percent of its value the first year you own it. That's a high cost to pay for a few months of enjoying that new-car smell. Check with Consumer Reports for vehicle reliability and resale information before you go used-car shopping. Once you find a vehicle that interests you, order a vehicle history report from a website such as Carfax and consider having a trusted auto mechanic give it a once-over before you buy. Combined, both of those precautions should cost only about $100 and will greatly reduce the chances that you're buying a lemon.
Furniture (advantage: mixed). With the possible exception of upholstered furniture — which can have hard-to-detect damage and possible sanitation issues — used furniture can be an incredible bargain. It might even be free. Keep an eye on the "Free" category on Craigslist.com and Freecycle.org for unwanted furniture, particularly when local colleges let out for the summer and many students give away their dorm furniture. Of course, the best used-furniture buys of all can be antiques or other pieces that will likely increase in value over time.
Home decor (advantage: used). Decorations and accessories for the home are the stuff that yard sales, thrift stores, flea markets and auctions (live and online) are made of. One of my Miser Advisers window-shops regularly at pricey home decor stores in the trendiest parts of town, but window shopping is all she does. "I use it as a chance to get ideas for arranging and combining different items in the home," she says. Then, when it's time to buy, she makes the rounds of yard sales and local thrift stores, where you often need a creative imagination to see the potential in their wares.
Recreational equipment (advantage: used). From recreational vehicles and boats to exercise equipment and even craft supplies, there are terrific values to be had by shopping for used rather than new. That's because people are prone to impulse buying when it comes to spending on hobbies and other pastimes, only to lose interest in their newfound passion a short time later.
Consumer electronics and computers (advantage: mixed). Factory-refurbished electronics — including home appliances and computers — can be a good value, particularly if they come with a solid warranty. Use extra caution, though, when buying a used laptop computer, even if it has been reconditioned; as anyone who's ever owned a laptop knows, they take their fair share of unintended abuse. With consumer electronics, before you decide to buy used, you also need to comparison-shop for comparable new items (since new prices often drop as demand increases) and make sure the technology is not obsolete to the point of your being unable to find necessary accessories and supplies.
Clothing (advantage: mixed). For casual wear, clothes to work around the house in, and children's clothing, thrift stores and yard sales are hard to beat. You'll pay only about 10 cents or so on the dollar compared with buying the same items new. For dress and business clothing — particularly if your profession depends on looking sharp — buy new, or check out consignment shops, where apparel is generally more fashionable, higher quality and in better condition (which is all reflected in the prices they charge) than what you'll find at most thrift stores. One other tip: Shoes of all styles and varieties are often an incredible value at thrift stores and are frequently sold in virtually new condition.
Mattresses (advantage: new). Mattresses and bedding are among the few things that even my Miser Advisers recommend buying new rather than used. Obviously there are possible sanitation issues — real or imagined — and the true condition of a used mattress is hard to judge until you get it home and sleep on it for a few nights. If you want to save some money, buy the bed frame used, but "spring" for a new mattress and bedding. (By the way, many mattress resellers will now accept your old mattress for recycling.)
Tools (advantage: mixed). The general consensus of my Miser Advisers is that simple garden and hand tools can be a terrific value when you find them secondhand. But beware of used power tools — and even electrical household appliances like vacuum cleaners — because they've often been used hard, and their best days are behind them. Even if you plug something in before you buy it used and it works, check for wear and tear on the power cord: A frayed or cracked power cord can be a sign of how much a tool or other appliance has actually been used and how much life it might still have left in it.
Books (advantage: used). Even though my livelihood depends on writing and selling books, I'm the first to suggest that buying used books is the way to go unless, of course, you're really smart and borrow them from the public library instead. It's not just about saving money and trees: Building your library by treasure hunting at secondhand bookstores and rummage sales can be as enjoyable as reading itself. And websites such as PaperBackSwap.com, BookMooch.com and TitleTrader.com let you pick up used books without even paying for them, just so long as you have another book to swap in return. Yep, in most cases it doesn't make sense to buy a new book.... Just don't tell my publisher I said so.
Jeff Yeager is the author of The Ultimate Cheapskate's Road Map to True Riches and The Cheapskate Next Door. His website is www.UltimateCheapskate.com and you can friend him on Facebook at JeffYeagerUltimateCheapskate or follow him on Twitter.
Also of interest: 8 Places to find extra cash. »