Want to get more out of your paycheck? Stop paying for stuff.
Let's be clear here. I'm not advocating Wynona Ryder's strategy for wealth preservation (shoplifting). I'm not telling you to spend less money, or to stop buying the things that make you happy, either.
Rather, I'm being 100% literal: Stop paying for
In the last year, unless you're incredibly frugal, you've paid good money for something you could've gotten for free dozens of times. And some of these things are big-ticket items. College students, you're doing it too -- freshmen especially.
Generally speaking, you won't have to pay full price for a lot of what you want as long as you're willing to accept a little wear and tear and buy from a regular person, not a retailer.
My friend Peter, the only person I know who really fits the "college student ruined by predatory credit card companies" profile, would spend thousands of dollars he didn't have on clothes and electronics, and it never occurred to him that he could find these items outside of a mall.
When you want something, you go to a store and buy it. That's automatic for most people, it's reflex and intuition all rolled into one. It's also why so many of my friends are broke or owe more money to their credit card issuers than they'll be able to pay back anytime soon. They didn't realize they could get many of the things they wanted without paying for them, or without paying anything like the list price for a brand new piece of merchandise.
So what stuff should you stop buying in particular? I'm glad you asked.
There is no reason for anyone to buy a new television set.
There is no reason for anyone to buy new furniture.
There is no reason for anyone to buy new books, and little reason to buy books at all.
Why not pay for a new TV? Come on, how many TVs get thrown out every day to make room for some state-of-the-art 60" high-definition plasma behemoth? If you look hard enough I'll bet you can find someone who will pay you to get rid of a perfectly serviceable television set that was considered top of the line six or seven years ago.
For someone with money to burn and a true appreciation of picture quality, buying a new TV makes sense. But when I say money to burn, I really mean money to burn. Unless you can afford to light up a fistful of Benjamins purely for the fun of it, you're better off browsing through Craigslist or eBay than cruising the aisles at Best Buy.
Sometimes a big TV will come out of nowhere and fall right into your lap. I rented an apartment off-campus for my senior year of college, and the two previous inhabitants couldn't be troubled to move out. They left behind a swollen, old-fashioned 32" TV along with two smaller and crappier 21" sets. My roommate and I agreed not to complain to our landlady about the less-than-empty state of the apartment in return for these vintage gems. I thought it was a great deal.
Then I spent the whole school year trying to give the third television away, but there were no takers. It just took up closet space until the lease ran out and my roommate suggested we make it a welcome gift for the new tenants.
As more and more people upgrade to massive, flat, high-definition TVs, their old sets will start to end up on the sidewalk for large-trash pickup day, and that's your chance. Or you could ask around or check the Internet.
What about new furniture? College students go crazy buying new furniture, even if it's usually cheap stuff. Who cares if it's cheap when you've got seniors regularly leaving their furniture behind or selling it for next to nothing? Furniture in a dorm is going to get dirty no matter what, so there's no reason to buy something pristine -- trust me.
It's not just college kids who spring for brand new furniture when they shouldn't. My friend Leon and his roommate Mike furnished their whole two-bedroom apartment for less than $200 with used furniture. I spent that much on a cool-looking lamp and it broke almost immediately.
New furniture is something you buy when you're thinking about starting a family, not thinking about starting a career, and even then you might want to look for something used and inexpensive.
And then there are books, which seem totally incongruous on this list. Until the 19th century owning books was a luxury. Anyone wealthy enough to have more than a dozen could put them all on one shelf and call it a library. Books were a form of ostentation and even illiterate members of the aristocracy would buy them in order to show off.
Today books are a lot less expensive and people are a whole lot more literate, but buying new books remains an unnecessary luxury. And unless you know that you're going to mark it up or that you'll want it handy 24/7, it's hard to justify the purchase of even a used book. The library's giving them away for free.
College students especially should take full advantage of their school libraries. Since a semester's worth of textbooks can cost hundreds of dollars, even buying only used editions, try to avoid buying books for class and instead read them at the library. Many schools will keep books for their classes on reserve at the library so you can read them for several hours, but no one can check them out. It's a great way to do the reading without getting robbed at the college bookstore.
Even with plain old paperbacks, for a voracious reader, buying new books can get expensive. When I was in high school I read constantly (as more than one media venue has pointed out, I'm a dork), and my dad, who had agreed to buy me all the books I wanted in order to encourage me, finally cut off my tab at Borders. He did at least have the good manners to teach me how to use the interlibrary loan system.
I'm sure I'm not the first to make these points, maybe not even the first to make them together, but whenever a professional personal finance guru comes out with three ways to save money, it's so hard to take his or her advice seriously. You may not feel the same way, but when someone who makes a career out of encouraging people to save dreams up a few more ways to do it, I don't jump up and down screaming in surprise and joy.
I know from the responses to some of my previous columns that many people in their 20s save money assiduously and love to talk about it, but the constant emphasis on saving is why no one listens to good advice like not paying for stuff you can get for free (or close to it). The conventional wisdom makes all discretionary spending seem the same -- it's all money down the drain -- but that's totally wrong.
Those of you in college and in your 20s shouldn't buy a new TV, new furniture or books (they add up) because you can get nearly equivalent stuff for far less and still have money to
spend -- or
save -- elsewhere. This isn't about denying yourself the pleasure of a brand new TV, it's about having a serviceable TV and anything else you want to buy.