Focusing on saving money is a broke mindset. If you focus on making more money, you’ll have more saved than the guy skipping out Starbucks lattes. – Josh Fechter
Conventional wisdom says “a penny saved, is a penny earned.” I’m not a preacher, but I often preach about the importance of saving and spending less than you earn. Saving and spending less than you earn should be the standard, but it’s easy to get caught with buying things that we really don’t need and things that provide negative value.
The quote above really opened my eyes to where our focus should be if we want to have abundance. Saving is important, but the focus shouldn’t be primarily on limiting our spending. There is a limit to how much you can save. Even if you save every penny, your maximum savings for that period will never be more than what you currently make. Rather than focusing on limitations, our focus should be to finding ways to MAKE more money and then save. Doing so will open up ideas and opportunities greater than what you can possibly save by simply cutting spending.
Saving by the Numbers
When I was in grad school a few years ago, I was working full-time and taking online classes. I was fortunate enough to have a job that covered tuition costs for up to $10,000, which covered close to half of the program. However, once I exhausted that amount, the rest of the bill would come out of pocket. At the time, I was making $44k a year before taxes, so having to come up with tuition money for my two classes that semester was going to be tough.
I looked at my budget and ran some scenarios in my head. The cost for two classes a semester was $2,500 before books. I could save $50-$100 a week if I didn’t eat out or go out. If I really tried, I could probably save $350 to $400 a month for the semester. In three months, I would save a maximum of $1,200 to help pay for my tuition. Sounds good, right?
For three months I would be eating cheaply and missing out on social gatherings and dates with my wife-to-be. On top of that, after the semester was over, I would still owe $1,300. Once the semester ended, I only had a few short weeks before the start of the next semester. If I went on this path, I would continue to sacrifice and prolong my frugal living. The thought of that didn’t sound too good.
I didn’t realize this then, but the problem with focusing on saving money is the limiting mindset. If you have a fixed income, spending is a balancing act. If you cut too much spending to save, you’re lowering your quality of life; you box yourself in by not going out, saving by eating fast food and being forced to hang out at home. When you focus on saving for a rainy day, you tend to worry more about that future large unexpected expense. This creates stress because you’re stressing to save for a rainy day, you’ll stress when it comes, and you’ll stress to save again for the future. This continuous cycle of saving is stressful.
At first, the thought of buying used things from people on eBay didn’t appeal to me. I never really thought of eBay as a source to make money, until I saw my future father-in-law doing eBay. He is an enthusiast of mainly antiques, coins and rocks. I thought to myself, “if he can trust eBay, to buy and sell things, then so can I.” He was more of a buyer on eBay, but it peaked my interest enough for me to open an account with eBay to start selling.
At first, I sold things around the house. I sold books, old electronics, and one pair of gently used shoes. Once that money hit PayPal, I wanted more. What else could I sell?
It was the fall of that year and I saw a headline for the new iPhone 4s. Although my 2-year old iPhone 3GS worked fine, I thought it was time for an upgrade. So I listed my iPhone. I looked at other listings to see what the market was like and to calculate how much I would potentially make from selling my phone. I came across the term “unlocked” and wondered why those phones commanded at least a $30 price above phones from AT&T and Verizon only iPhones. Carrier unlocked phones meant that you could use an iPhone with a cheaper carrier or even a pay-as-you-go plan before those plans were popular and contracts still ruled phone plans.
So I shifted my focus. I asked the question, how do I make more money selling on eBay? After I sold my iPhone, I became curious about profiting from buying and selling iPhones. I noticed that there were broken iPhones being sold left and right. I saw the average cost of a broken phone and saw that the profit margin of a used phone was more than double the cost of the parts to fix it. If I were to repair and unlock the phone, my profit margin would be close to $100. Seeing those numbers was enough for me to try it out.
To get started, I searched YouTube and Google to figure out how to fix broken screens and how I could unlock my iPhones to be used for different carriers. I found out that it was relatively simple because there were a lot of tutorials online. After a few fixes, I found that I really enjoyed repairing broken phones. That’s when I realized I found my niche. I enjoyed everything about it; buying and selling, customer service, and especially making money. I created an eBay store for more efficiency and lower fees.
Within days, I was hooked. I liked bidding and shopping for phones to fix or unlock. Once I received those phones, I gave myself a 1-day turnaround to fix, refurbish and list. I created a spreadsheet to calculate my profit/loss per item with each buyer’s username so I could easily reconcile if there were issues. One day, I even had someone call me directly because early on I had my phone number listed on the packing slip just in case they wanted to reach me over the phone. I was very attentive to my customers whenever they had questions and if they had issues. Doing all these things helped my ratings and reputation as a seller. The more sales, the better it was for business.
Of course, there are times when things weren’t great. I was scammed a few times. There were a number of buyers who claimed they didn’t receive their phones, even though tracking said they were delivered. Claiming lack of receipt was common for scammers, but I’ll never forget this one purchase from Florida. When the buyer received my phone, he activated his sim card and switched the motherboard of my perfectly good phone with his broken one and sent it back for a refund. When I got it back, it was dead on arrival. I filed a claim, but this was before eBay’s revamped seller protection program. I learned my lesson when I lost $400 from that transaction.
Thankfully no other transaction was of that magnitude. In 12 months, I made around $12,000 buying and selling phones on eBay. All in all, it took about 20 hours of additional work per week to maintain my eBay business.
The following year, I got a raise from work. I made less online because there were more people in the market. As the competition increased, the profit margins got smaller. I liked buying and selling phones, but I didn’t like selling other things. I stopped selling shortly after the 2nd year because the cost/benefit ratio wasn’t in my favor anymore. It was fun while it lasted.
Ask for more money
In a way, my eBay experience was me asking for more money. Since I didn’t want to take on debt to pay for school, I needed to make additional income. If I focused on saving, I still would have only saved $4,800 ($400 x 12) in the same 12-month period. There are intangible costs of saving too. I found that if I wanted to maintain my lifestyle, then I needed to make more money. I was able to increase my income to pay for school through eBay and it allowed me to SAVE MORE–a lot more than I could have if I just focused on saving money.
We can all use a little more money. Just do a Google search, and you’ll find multiple ways to make a side income. Popular sites like The Penny Hoarder abound with ideas for how to make a few extra bucks, some methods more time consuming than others. Like I did, facilitated by sites like eBay, you can sometimes convert your junk into someone else’s treasure. Will you get rich from these side jobs? Probably not. But if you change your mindset from cutting expenses to growing your wealth, you can at least supplement your income and probably have some fun while doing it!