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Category: Budgeting

Using PayPal as a Budgeting Tool

Using PayPal as a Budgeting Tool

When I first discovered EBay, I was quite skeptical of the place.

When I finally tried it out, I instantly became addicted.

I was always buying things that I thought I needed at the time, going to the post office, and impatiently awaiting the mailman’s arrival with my packages. Soon, this became a rather serious problem, as I simply do not make enough money to throw away.

I would try to tell myself I needed to save if I had anything left over after expenses. Or worse, at least try to convince myself not to buy anything on EBay until I had actual necessities covered.

But it all failed.

I bought more and more items on EBay.

Finally, I needed a PayPal account.

I told myself I would not use this account for EBay, but only for things that truly required PayPal. I used PayPal when selling things on EBay so that I could accept payments.

I would use PayPal to receive commission on photos and payments on articles. I managed to not use PayPal for EBay for about a year.

Then an idea struck me one day. What if I only allowed myself to use PayPal for EBay and other places that accepted PayPal.

If I didn’t allow myself to link a credit card to my PayPal account, my spending would be much more limited. This would force me to pay expenses with money earned from my low paying jobs, while extra work I did that went towards my PayPal account could pay for me to have some “fun money“. I liked this idea very much and decided to try it out.

I initially bought a lot of jewelry with the money I had saved up in PayPal. Then I went on to look for CDs. But what would happen when the money ran out?

This was a bit harder. I would see that I had enough money for something in my bank account, but not in my PayPal account. Yet I forced myself to wait until I had enough in my PayPal account to buy what I wanted if it was not a neccessity.

Of course, I still bought a couple things on EBay and other sites that accept PayPal with either my credit card or by money order. But I was careful to only use other options besides PayPal to purchase something that truly was a necessity.

Just by getting PayPal, I have managed to greatly reduce my spending on EBay. And all those hours watching auctions? No more wasting so much time online for me. I now volunteer at an animal rescue and a marine mammal rehabilitation center in my spare time.

Not only have I reduced my time and spending on EBay, but with PayPal I have also reduced my spending on other sites that accept PayPal. If I can spend my PayPal money instead of putting something on my credit card, I will do that instead.

I learned my lesson.

Rather than PayPal being a dangerous tool that would increase my time and spending on EBay and other sites, PayPal proved to be a valuable tool that has helped me save money, keep out of debt, and not waste as much time that could be spent doing something useful.

The New Vs. Used Car Debate

The New Vs. Used Car Debate

This is a response to a blog post I read. In it, the writer simply asked the bloggers how they really felt on this topic and then posted their responses.

I was surprised at the responses of some of the bloggers who said they preferred to buy new, considering that I thought they were supposed to know a thing or two about smart money habits.

The Prefer New Responses

Overwhelmingly, the main reason responders said they prefer to buy new is for the lack of problems they will have with the car. They understood that the car loses value the second it is driven off the lot, but justified this by saying that they plan to drive it for a long time.

I tend to disagree with this logic in both cases. Who says that new cars won’t have any problems, and how do you know you’re going to drive it for a long time?

The Prefer Used Responses

Most of the responders said they preferred to buy used cars. The reasons varied slightly, but did not include their desire to drive old scratched and dented beaters all the time.

Of course everybody would like a new car, but these responders chose used for wise and sound financial reasons.

The biggest reason to avoid buying new was to not take the major hit in depreciation the moment the car was driven off the lot.

My Take on New Cars

I would fall into the category of people who have never bought a new car. My take on the issue is slightly different than all of the ones I read on Shawanda’s blog post. I agree with all of the financial reasons for not buying new, such as avoiding depreciation, better deals and lower insurance costs. But I look at the situation from an entirely different perspective.

Why do you suppose new cars lose so much of their value so quickly? Do they really actually lose their value, or did you pay too much in the first place? The only place you can purchase a new car is at a dealership.

You can’t buy directly from the manufacturer, and you obviously can’t buy a new car from a private party. Have you seen the big fancy buildings and showrooms at new car dealerships?

Do you know who is paying for those buildings? That’s right, the people who buy the new cars. So, did the car really depreciate, or did you just send send a huge chunk of money to the manufacturer, dealership and salesperson just for the privilege of owning a new car?

How I Buy Used Cars

When I am looking to buy a car, my number one rule is to avoid dealerships. I am not mad at dealers and I understand that they and their salespeople need to make a living. I simply choose not to contribute to their salaries by paying more for a car than I have to.

A used car dealer is no different from a new car dealer in that they have overhead expenses that need to be covered. In most cases, you will pay more for a used car at a dealership than you would if you bought from a private party.

Even if the dealership doesn’t make a huge margin on the sale of the car itself, they make money in many cases by selling you the financing or the rip-off extended warranty. I also prefer to avoid the whole haggling with a salesperson routine.

Private-party is definitely the way to go if you are looking for the best deal on a car. I have had luck with Craigslist for my last few car purchases.

Combine a Craigslist search with research on car values on a site like Kelley Blue Book, and you can’t go wrong.

In most cases the seller will accept a slightly lower offer than their asking price because that is just what is expected in private party transactions like this.