If somebody told you that investing a bit of time and effort around and in your home could net you $4,200 to put towards debt repayment or a savings goal, would you do it?
According to The Gumtree 2018 Second Hand Economy Report, 89% of us have an average of $4,200 in unwanted items sitting around in our home (or garage). As an incentive for a clear-out, that’s certainly a good one. What would you do with $4,200?
Minimalism is on trend. And why not? It gives direction to people overcome by the constant consumerism of the last decades. The premise is that we will live better lives without the clutter of material things around distracting us.
As a bonus, being minimal in your approach to where you live, and what you buy, frees up money to set aside for other things.
What are people buying and selling second hand?
According to Gumtree’s research, the main items being purchased second hand are books, furniture, cars, collectibles and antiques, clothing and shoes.
90% of us have purchased at least one second-hand item in our life, and more than half of us have sold something second-hand in the last year.
The most common unused items that we have sitting around the home are clothes, shoes, accessories, books, music, DVDs and CDs, games and toys.
Where should I list my items?
The best-known websites are Gumtree and eBay. Gumtree is great if you want to list a set price and give people the opportunity to contact you and offer the price or attempt to negotiate.
You can do this on eBay as well, though it is best known as an auction site. Start the bidding, set a reserve and a timeframe and hopefully watch your item be bid for.
Both these websites make it very easy for both buyers and sellers, with answers to all your questions easily accessible.
Other websites are also growing in popularity, including the use of Instagram & Facebook Marketplace. Alternatively, lots of people still enjoy an old-fashioned garage sale.
Choosing what to do with the money you make
For some inspiration, we suggest you check your MoneyBrilliant account. Do you know how much you spent in the last 90 days on credit card interest? Or home loan interest? What is your superannuation balance?
For some more ideas on where to put your money, here are our top 10 ways to spend a $4,200 windfall.
Top 10 ways to spend $4,200
#1 Pay off any outstanding bills Makes sense, right? Who wants to be chased up for payment? If you have any outstanding bills, parking tickets or overdue amounts etc. lying around then get them out of your life.
#2 Pay off your credit card If you’re a revolver, that is somebody who doesn’t pay the full balance of your credit card off on the due date, then you are making the banks money! Chances are your credit card is the debt you have with the highest rate. So, pay it off, and start earning interest on your savings instead.
#3 Pay off your personal loan Do you have a personal loan? The freedom that comes with paying a debt off and no longer having monthly payments is amazing. Feel lighter every month by repaying it totally or watch the loan term (or payment) shrink accordingly when you pay a chunk off.
Remember, it’s best to attack the debt with the highest interest rate first, so if you have credit card debt, you’ll be better off by putting any extra cash there.
#4 Slip an extra payment into your home loan An extra $4,200 cash injection into your mortgage at the beginning can save you an extra $11,800 in interest and shave 6 months off a 30-year loan term. You’d be crazy not to!
#5 Make an extra superannuation contribution You can make a concessional contribution directly from your bank account to your superannuation account (and claim a deduction at tax time). This is as long as you don’t breach your cap and you meet the eligibility criteria. It also involves having given your super a fund a Notice of Intent to claim. Be sure to check out the rules before making the payment.
A non-concessional contribution into your superannuation can give your superannuation a boost. The cap for this is $100,000 per year.
Alternatively, if you have a non-working or low-income spouse you can make a contribution to their super fund and get a tax offset of up to $540 for the contribution. Be sure to check the ATO website for eligibility.
#6 Invest in a managed fund or buy some shares Managed funds are a great way to start exploring the investment market. Often you can set up a managed fund with an initial investment as low as $5,000 although some funds will let you start with less. A risk assessment will help you decide which investment allocation would suit your profile.
As an alternative, you could buy some shares. Have some fun researching and learning about share investments. Starting small can lead to great things.
#7 Invest in you Is there some study you want to do? This could be the perfect opportunity to update or enrich your skills and give your career the boost you’ve been looking for.
Furthering your career may require you to update your image. You may want a new resume or a personal shopper experience to get the right wardrobe.
Otherwise, you may have a student loan that you wish to repay.
#8 Start a holiday fund Do you need a holiday? Have some fun dreaming, take a look at some travel brochures and figure out your destination and budget. Park your funds in a high-interest online saver and keep saving. Before you know it, you’ll be on your way.
#9 Use the money to cover Christmas and New Year’s celebrations Do you come out every January with a post-Christmas and New Year’s money hangover? How nice would it be to have the money already accounted for and to hand?
Get yourself on the front foot and start 2019 in a good financial place thanks to using your unwanted goods to cover celebrations rather than your credit card.
#10 Start an emergency fund Do you have an emergency fund? Money to access when something bad happens? You can’t plan everything. Sometimes a bill hits, an accident happens, or you fall ill or lose your job. If the unexpected happens a buffer will alleviate financial stress while you deal with the other stuff.
This article has been prepared by MoneyBrilliant Pty Ltd (AFSL 492711). The information in this summary is of a factual nature only. We are not suggesting or recommending that you take any particular course of action in relation to any financial product or service. It does not take into account your personal circumstances or objectives. If you need financial advice or taxation advice you should seek advice from a licensed financial adviser or tax agent. You may also be able to access additional information from the websites of the Australian Securities and Investment Commission (ASIC) or the Australian Taxation Office.