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Sunday, March 18, 2012

The Ego Premium

As I have mentioned before, one of the ways I am working to increase my income is by reselling used goods. I get these from a variety of sources, like garage sales, auctions, the trash, whatever. But after doing this for a while one thing that you really start to notice is just how much value these items lose just by being used. I guess I should have said 'price' instead of 'value', and that is sort of my point. Used goods almost always have 100% of the utility or usefulness that they did when they were new, and yet they are significantly cheaper.

Most people sort of understand this on a basic level, but the extent of it isn't going to be clear until you see just how big of a difference there is. And I see it constantly because of my side hustle of reselling used goods. I am shocked almost every time I go into a store, at the prices of stuff. I'll be thinking "Those are HOW much?! I could barely GIVE those away!"

Almost every time the people pay extra for new goods they are doing so for one of 3 reasons:

Laziness, 'icky factor' or ego.

Laziness: People will pay 5.99 for a kitchen utensil that could easily be bought for a quarter at a garage sale or thrift store simply because they just want to buy it now and get it over with. I understand the sentiment, and like i have said before, if it was a one-time thing that extra 5 bucks wouldn't change a whole lot in the long run. But when you are doing that for every purchase, big and small, day in and day out, then the difference is huge. It can be the difference between poverty and financial freedom.

Icky Factor: I suspect this is mostly an ego issue, and wouldn't be a real issue if people were legitimately not worried about other;s opinions (which is the best trait to have). But some people are legitimately grossed out at the idea of using used things, like clothes, utensils, etc. What's stupid is that none of these people would think twice about eating at a restaurant, and using a fork that has been in 10,000 mouths, but they balk at buying a spatula at a garage sale because it has been used by ONE other family. This is just something that you will need to get over if you really want to be able to save big money. The premium for buying stupid plastic crap new is so huge it just doesn't make any sense.

Ego:  This is the big one right here. When you learn to get over worrying about appearing cheap or poor or whatever, the journey to financial independence is almost easy.  For many people it is the hardest aspect of living frugally, and one that many just simply can't overcome. But you HAVE to if you want success. The best solution I can offer you for this is to surround yourself with like-minded people. If you can't do that in real life, then visit forums like at Mr Money Mustache, or ERE. Then you can worry about trying to impress people with how LITTLE you spend. It's a totally difference mindset, and a much better one if you want to retire early!

So buy used if at all possible! Don't pay the ego premium!

-The Money Monk

1 comment:

  1. Great point on the ego factor. I call this factor the "fear of man" factor. Ultimately it stems from the trunk of pride.