How will Canada’s second-hand economy help with your debt?
If you are serious about trying to pay down debt, you need to alter your monthly budget so that you’ve got extra money to go towards debt payments and support the rest of your expenses in cash. With the high cost of living, this can be a challenge. You either need to increase your income, cut your expenses or both.
“Going out and getting an extra job is a great way to boost your household income in order to pay down your debt, but that isn’t always manageable from a logistics point of view. In that case, you need to be creative in ways that you can make your budget stretch further,” says Jeff Schwartz, executive director, Consolidated Credit Counseling Services of Canada.
According to a new report from used buy and sell site Kijiji, Canadians who buy and sell in the second-hand economy are effectively giving themselves a pay raise because of how they can generate extra income and/or cut their expenses.
Highlights from the report include:
- 85 percent of Canadians are getting active in the second-hand economy, either through buying or selling, which is more people than ever
- It is estimated that buying and selling used items can put close to an extra $1,959 ($825 on average saved by buying used goods instead of new and $1134 on average earned by selling unwanted items) a year in your pocket through extra income or cutting costs, which outpaces the average annual pay increase for full-time employees in Canada ($1,729)
- Second-hand purchases have grown substantially since 2016, up by 20 percent. They now comprise half of all purchases
- The second-hand economy totalled $28.5 billion in 2017, which is equal to 1.34 percent of the GDP.
- What are Canadians doing with this extra money? A third of respondents said that they were using the extra money to cover household expenses; 18 percent used the extra money for savings, while 10 percent used it to boost debt repayment
- The top items exchanged in the second-hand economy are clothing, shoes and fashion accessories, entertainment items (books, CDs), baby clothing & accessories, furniture and games, toys and video games
The first step to paying down your debt is to establish a budget. Our trained credit counsellors can teach you about budgeting and help you determine what path you should take out of debt. Call us at 1-888-294-3130 or visit free online debt analysis.
Here are some tips to help you get involved with the second-hand economy so that you can save and make more money.
Buying and selling used not only can help your household budget, it is better for the environment. Also, selling unwanted items in your home can help you to declutter, which is going to help you get more organized.
This is especially important if you are serious about paying down debt. The more organized that you are, the more quickly you will be able to reach your goals. That’s because your efforts will be the most efficient.
For one thing, you will be more able to do an accurate inventory of your belongings, so that you don’t waste money on things that you already have. You will have more time to plan purchases, ensuring that you get good value.
How to get the most selling your unwanted items
“Almost every household has items that are no longer being used. Don’t forget, your unwanted items represent a chance for someone else to make value purchases, helping you both to put money in your pocket,” says Schwartz.
Go through your home room by room and sort through items. Have three piles: keep, sell and donate. As a rule of thumb, if you haven’t used something in a year, you probably won’t use it again. At the very least, it isn’t crucial to your household and you can let it go.
Once you’ve determined what items are suitable for sale, proceed to the next step- selling your items. You can host a yard sale if you’ve got a number of items to sell all at once. Take advantage of used buy and sell sites. Post your items on social media. Post pictures on buy-and-sell boards at your local grocery store and community centre. Participate in swap meets. Spread the word with friends, family, neighbours and co-workers.
How to save the most buying used items
Adopt a mindset that you will attempt to buy every item that you possibly can second-hand. Be particularly committed when it comes to things like cars, bikes, sporting equipment, clothing, books (especially textbooks), furniture, formal wear (wedding dresses, suits, prom or evening gowns) toys and baby equipment. These items all tend to come with hefty premiums when you buy them new.
For example, instead of heading to the mall to buy your clothes, head to your local consignment store. You can trade items in while you are there and purchase “new” items at a discount, doubling up on the savings. It is smart to get to know the consignment store staff and to communicate what items in particular that you are looking for. Sometimes they will let you know before these items even hit the store shelves.
Don’t be afraid to negotiate when buying second-hand. Motivated sellers are often willing to drop their prices.
Plan your cash flow
Plan ahead for the extra savings or extra money that you earn through participating in the second-hand economy. Decide how you are going to pay down your debt. The best option is to consolidate your debt and then put as much as you can down every month in a single payment. If that isn’t possible, pick your highest interest-bearing card and start with that first.
Commit to buying and selling used and to paying down your debt with the extra money, and you’ll be debt-free much faster.