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Earn More Money: eBay Selling and Flipping

This article was written by Flexo in Income. 13 comments.

This is the second article in a series about methods of supplementing income with spare-time projects. I typically focus on the big changes people can make that result in earning significantly more money, but this series focuses on incremental income. The first article was about becoming a secret shopper.

A friend of mine is stuck in a job she hates. She’s been looking for a way out, but for financial reasons, is currently stuck in her position. One way she’s trying to earn some income is by buying items at low prices from a variety of sources and selling these items on eBay for a profit. The concept makes sense, because eBay is such an efficient market. Garage sales or yard sales are much less efficient because there isn’t a wide pool of potentially interested buyers to drive up the cost of a rare item. Nevertheless, people still use garage sales to sell unwanted items because they don’t want the hassle of creating an effective eBay listing.

Finding deals at physical shopping locations and selling those items on eBay can produce a healthy profit with the right kind of knowledge guiding the shopping prices. It’s also possible take advantage of bad eBay listings and flip products purchased online for incremental income.

Finding the right items to sell

Income potential for selling items on eBay is limited only by the seller’s ability to recognize good deals before purchasing. In this case, a good deal is anything that is underpriced based on the eBay market. This type of knowledge comes from paying close attention to completed eBay sales. It would be very difficult to understand the eBay market for all products, so it might make sense to focus on one or a small number of product categories, such as old books, magazines, dolls, vinyl records, or vintage clothing. As you gain knowledge and experience, you might have the confidence to expand into additional categories.

Book Sale Knowing the target prices for purchasing products, the price at which you will be able to earn a profit, is one step for finding the right items; next, you need to be in the right places to find a deal. Here are a few locations where you may scour for deals.

Garage sales and yard sales. Your local newspaper or local events website can help direct you to garage sales in the area. At garage sales, you can often be successful negotiating towards a better deal, increasing your potential profit if the item can be sold on eBay. There are two good times to visit garage sales: at the beginning, when some of the best deals have not yet had the opportunity to be scanned by other shoppers, and at the end, when you have stronger negotiating power and sellers who are motivated to get rid of their less popular items at any price.
Book sales. Libraries and schools often put collections on sale to the public once they’ve outlived their use. The key is to be able to cherrypick the best selections, spotting any editions that may be rare or collectible. That isn’t the only way to succeed, however. Often, at the end of sales, you may find that the selling organization offer deals where you can fill a box of any books and take an entire lot at a small price. Even with books that aren’t rare, you can make a profit by listing these individually on eBay or a book selling website of your choice.

For an overview of what this can be like, take a look at the Bryn Mawr/Wellesley book sale, an annual event in Princeton, New Jersey. The claim to be the biggest book sale on the east coast, and many shoppers here are looking to profit by reselling their finds. Here’s a video.
Other eBay auctions. If you become adept at spotting auctions that are not well-designed and would not attract a lot of interested buyers, you may be able to bid a low price, win the auction, and turn the item around on eBay with a better listing to earn money. There are tools you can buy that help in this endeavor, but I wouldn’t suggest paying any money up front for a tool that can help with incremental income. Search eBay listings for popular misspellings, and you may find popular items with less traffic than they should have, if the correct spelling was used. Many sellers anticipate misspelled searches and use incorrectly-spelled words in their listings to draw more attention from potential buyers.
Flea markets and swap meets. Thanks to eBay, it’s less likely to find great deals at flea markets and swap meets. The more savvy vendors have moved the bulk of their operations online because of the greater revenue potential. Nevertheless, flea markets and swap meets could provide some opportunities for finding profitable items, but education and experience is more important than ever.

Building your eBay reputation

You can attract more potential buyers on eBay by being a good — and frequent — seller. Always offer good return policies and always communicate well with your customers. The feedback and ratings they provide will solidify your reputation as a trusted seller. The more you sell, the more eBay increases your status. The more business you do on eBay, the faster you will move up to and through the ranks of PowerSeller. The eBay PowerSeller badge is a somewhat important piece of advertising for your seller account, but it isn’t the only criterion that buyers are concerned about. Interestingly, as a PowerSeller, eBay allows a certain number of policy violations, but the more you make your selling approach friendly to buyers, the less you need to worry about that.

To build your reputation, you may want to focus on growing positive feedback from buyers, and that might require forgoing significant profit. Sell as many items as you can handle, even for a bargain, to quickly receive the positive feedback you need to attract more discerning buyers.

Here are a few ideas that will move your reputation in the right direction.

Ship your items quickly after receiving payment and offer shipment tracking.
Respond to shoppers’ inquiries immediately.
Charge reasonable prices for shipping.
Always be gracious in your communications.
Leave great feedback for others.

eBay selling income potential

Unfortunately, the internet is full of promises of riches to be derived from selling items on eBay. Many such advertisements simply fail to subtract the cost of goods from their revenue, others just outright lie. However, it is possible to earn a living making a business out of scouring physical sales and inefficient eBay listings for deals, selling the best finds for a profit on eBay. My former co-worker’s husband made such a living, but I believe he would say that he wasn’t exactly rich and it was a hard, time-consuming job. He focused on music recordings, and really enjoyed music, so besides the potential revenue he was working with something he enjoyed. Furthermore, their entire apartment was full of stuff determined to be unsaleable or waiting to be sold. To do this well, you may need significant storage space while your items are being sold, and that could be a drawback.

More likely than making a living, this process has the potential to add a few hundred dollars to your bank accounts each month. Even this requires diligently finding only the best deals and attracting enough buyers on eBay. In the worst case scenario, you spend more for your inventory than you can make by selling on eBay, resulting in a loss. It’s a risky business, but you can reduce that risk with practice and by focusing your tactics on a specific category to start.

Do you have a profitable side business (or main business) selling or flipping items on eBay? What are your suggestions for success?

Photo: Phil Roeder

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Gradual Frugality: Finding Enjoyment in Saving Money

This article was written by Leo Babauta in Frugality. 26 comments.

This is a guest article by Leo Babauta, originally published on Consumerism Commentary on April 3, 2007. Leo, the author of Zen To Done: The Ultimate Simple Productivity System writes about achieving goals, creating habits, productivity, personal finances, frugality and more at his blog, Zen Habits.

On Zen Habits, I detailed some of the things I have cut out of my life in order to save money and eliminate my debt, such as cutting my own hair, cutting out cable TV, becoming vegan, working out at home instead of the gym, brown-bagging it to work, never going out to clubs or the theater, and more.

An anonymous reader then commented, sarcastically, “Here’s another way to save money. Lock yourself in a box until you slowly die of starvation and/or boredom.”

I understand that sentiment. When I list out all the things that I’ve cut out of my life, it sounds horrible, even to me. But here’s the secret: if you cut things out a little at a time, it doesn’t seem hard at all.

And here’s another secret: living frugal isn’t that hard at all — in fact, it’s extremely enjoyable!

I didn’t cut out all the things on my list all at once. That would have been quite a drastic change, and I’m not a fan of drastic changes. My philosophy is that changes should be made gradually, with baby steps, over a long period of time, otherwise they won’t be sustainable. Want to lose weight? Don’t try to drop 30 pounds in a month — lose a pound or two each week, and over the course of a year you’ll lose 50-100 pounds!

The same goes with frugality. Cut out one thing from your life, or change one spending habit, every couple weeks, and over time you’ll have cut out a lot of unnecessary spending. The thing is, you get used to the changes, and after a while you don’t notice that those things are gone. Sure, cutting out cable TV was a big change at first, but after a month or so, we didn’t miss it at all. Now, it seems crazy to have cable TV all the time. We go over to other people’s houses, and they’re glued to the TV all day long. That’s not a criticism of them, but an indication of how our lives have changed. There are other things we love to do besides watch TV, and if you’re creative, they can be fun and cheap!

Here are my tips for gradual frugality:

Start out by making a list of things you spend money on each month, big or small. List all your monthly bills, but also the little things you buy, like magazines and books and DVDs and gadgets and car washes and lattes and beer. It’s helpful to track your spending for a month — I just did it in February and it was very revealing.
Mark the things on your list that are optional, not essential to living. There may be quite a few, if you haven’t been trying to be frugal until now.
Choose a small goal to start. Don’t choose anything too outrageously difficult. Just choose something small that you think you could do without, perhaps magazines. This shouldn’t be something to which you’re addicted; that should be saved for later. The reason for starting small is to give yourself a chance to be successful in the beginning and then build upon that success for even bigger successes down the road.
Stick with that one change for at least two weeks. A month would be even better if you can be that patient. After those 2-4 weeks, choose another item on your list. Make it a small one again, perhaps slightly bigger, but nothing huge. Repeat this process every 2-4 weeks, and you won’t notice much of a change.
Celebrate every success! It feels good to accomplish a goal like this, and you should be proud of yourself. Reward yourself (but nothing too expensive!).
Put your extra money towards debt or savings. If you’ve cut out $20 a week on small purchases, put $40 extra every paycheck towards paying off one debt, or put it towards savings if you don’t have debt. That’s a small amount, but it’ll add up to $1,000 every year. And as you cut out other things in your life, that amount will grow every month.
Have fun for free or cheap. Don’t let this process of frugality be a process of suffering. Have fun while you’re doing it. Cutting out going to expensive restaurants? Pack a picnic and go to the beach or park instead. Cutting out your weekly movie night at the theaters? Rent some old movies on DVDs, pop some popcorn, and cuddle together with your significant other or family. Be creative! There are lots of great ways to have a blast on little money.
Enjoy the process. You are cutting back on things to achieve a financial goal. That in itself is very rewarding. Always keep a positive mindset. If you feel like you’re having a difficult time, it will be difficult. But if you only allow yourself to think positive thoughts about your process of frugality, it will be as easy as pie. Speaking of which, making pie is a great thing to do for cheap!

Photo: pittaya

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Extreme Couponing Fuzzy Math

This article was written by Flexo in Consumer, Featured. 35 comments.

I’m a big fan of saving money on necessary spending. Grocery shopping is expensive, and food and household staples present an excellent opportunity to find coupons and save money with every visit. The savings can be substantial if you’re willing to put in the time to find the right coupons, dumpster-dive to collect other people’s circulars, and annoy anyone in line behind you at the cashier as you buy in excessive bulk and wait for all the coupons to be processed.

A recent article on CNN Money describes a coupon addict who, inspired by a television reality show, saved $300 this month on groceries through diligent or obsessive coupon-collecting. She’s a student, and apparently has the free time to scour print and the internet to come up with methods of overbuying that will result in saving money. The grocery bill dropped from $400 to $100, and that’s a great feeling. Getting a 75% discount is a major score for anyone who has to spend money.

Saying she saved $300 is bad math, though, because in order to save $300, she had to spend much more than she would have if she bought only products she needed. The test is whether all the products she purchased — and they are enough to fill up a spare bedroom in the house — are consumed by the family or thrown away because they are not needed until they spoil. Additionally, to buy products on sale, most likely, she compromised on products they would normally buy. The food she purchased might not have been as healthy or as fresh as the food on which she couldn’t have saved as much.

Welcome to America’s new coupon craze. It began nearly three years ago as a sensible response to an economic catastrophe but has since morphed into something more complex — a national fixation with refusing to pay retail that has turned otherwise normal families into coupon-clipping, Dumpster-diving (for circulars), cashier-pestering stockpilers who march through grocery stores with bulging binders of coupons and fill shopping carts with more free jars of mustard and cat food than they could ever use in a lifetime.

There’s no baby in the house, but Lauren couldn’t resist buying 30 containers of infant formula on sale for $3.78 each. Because she had collected piles of $5-off coupons, she earned a $1.22 store credit on each sale — the holy grail to serious couponers. (She used her credit to buy ribs for a Memorial Day feast and donated the formula to tornado victims in nearby Joplin.) As couponing became an obsession, her mom started to worry. “Your eyes light up like a slot machine whenever you see a deal,” Joyce told her. “Admit it, you’re an addict!”

Even if $300 per month is the actual, repeatable savings after taking spoilage and over-purchasing into account, I have to wonder how many hours she spends finding coupons. While some websites make this an easier chore, the act of extreme couponing can consume one’s life. While $300 per month on groceries is a good savings, if she takes the time she spends couponing and gets a job, even after taxes, she could earn more than $300 a month.

If she ceases couponing, the family would have a spare bedroom free because it wouldn’t be full of groceries for storage. If they so desired, they could earn $300 per month or more by renting the room to a tenant.

While extreme couponers are not hoarders, they often share are trait in common. Both hoarders and some extreme couponers acquire and don’t discard possessions that have limited value. If there’s a possibility of a product being used some time in the future, a couponer would not want to let that purchase go to waste. Spending less money per item to get more is a core couponing concept, but it results in over-purchasing and spoilage. Throwing unneeded food or products out would be a waste of money.

The article shouldn’t have claimed that this family’s extreme couponing results in a $300 savings each month. This math compares the over-purchasing price pre-coupon against post-coupon. If the student were not couponing, the family would be purchasing much less. If all this work results in just a $300 benefit to the checking account, if she wanted to contribute financially to her family sporting a six-figure income, she could be better off with a part-time job. The “hunt” and the “score” are so psychologically appealing, though, that the brain can easily rationalize extreme couponing despite better uses of money, time, and space.

I can’t wait for this craze to be over.

Photo: Walmart Stores
CNN Money

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Family Earning $225k Annually, No Emergency Fund

This article was written by Flexo in Planning, Real Estate and Home. 22 comments.

Money Magazine featured a story about Rick and Amy Mendez, a couple in their early forties with two children, earning an income of $225,000. They have a healthy retirement plan balance, and they needed to borrow from their 401(k) to pay for an emergency. Here is a family of four earning $225,000 a year, with a nanny and two investment properties, that can’t afford to replace the roof in their primary residence.

It’s easy to judge other people’s choices when they are brave enough to feature their expenses in a national magazine. This level of income for a family of four should be enough to cover expenses, save for the future, and handle emergencies, but the Mendezes are running into problems. The writer of the article analyzes the family’s expenses and concludes three changes are necessary in order for the family to put away $25,000 for emergencies: slice the budget, turn off the 401(k) for now, and pay down the credit card bill to the tune of $2,000 per month.

The financial adviser and the article’s author completely overlook that the family owns two investment properties in Florida that are under water. Like many others, the Mendezes succumbed to the perceived easy money available in investing in Florida real estate. When the real estate market crashed, the paper losses have prevented them from acknowledging that they made bad investments and should get out of them.

It’s not clear how much of their $4,450 monthly payment towards mortgages, 401(k) loans, and car loans goes to these two properties, but I estimate they could save at least a thousand dollars per month if they sell. Since the properties are underwater, though, they’d have to come up with the balance of the loan. It’s not clear what the value of the properties are and the remaining loan balances, but this short-term hardship could be worthwhile to prevent long-term problems. With the increased monthly cash flow, they could start building a $25,000 emergency fund.

Do you think they should keep the failing investment properties and wait for the values of the homes to recover?

Money Magazine

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Why Airlines Continue to Add Fees

by Flexo

I don’t like the fact that when I think I know how much it will cost me to travel round-trip from where I live to where some of my family lives, New Jersey to California, there always seems to be new fees I hadn’t considered. I’ve managed to eliminate most of these extra fees by ... Continue reading this article…

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3 Mistakes I Made That Cost Me Thousands

by Darwin

This is a guest article written by Darwin, the author of the blog Darwin’s Money. Darwin is a numbers guy with an MBA. If you like this article, subscribe to the Darwin’s Money RSS feed for more. You live and you learn, right? Well, that can be expensive when you’re first setting out in the ... Continue reading this article…

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The Long-Term Prospects for Stocks: Game Over?

by Flexo

For as long as I’ve been paying attention, which admittedly is only the last ten or so years of my total thirty-four, personal finance experts have been extolling stocks as the best long-term investments. Over long periods of time they provide more growth than any other type of investment like bonds, with an expected rate ... Continue reading this article…

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Creating a Risk-Free Retirement Plan

by Pop

Or, how to invest like a grandmother. This is a guest article by Pop. Pop writes about the intersection of behavior, economics, and personal finance at Pop Economics. He writes about investing for a living and turns famous economics figures into pop art for fun. I’m young, as I bet a whole bunch of you ... Continue reading this article…

16 comments Read the full article →