Here is How to Never Lose Money

Last updated on August 9th, 2016

With every dollar of earned income, you have two choices. You can spend it or save it. If you save it, you’ll probably end up investing in something. And of course, you invest because there is a reasonably good chance that the investment will appreciate in value. Why else would you choose to buy stocks, rental houses, or anything else if the expected return on your investment was negative?

Never Lose Money

It doesn’t matter what you invest in, you expect the value to increase, and your wealth to grow. That’s the basic premise behind this blog and our frugal lifestyle. If there weren’t any reasonable investment opportunities to grow our wealth, we’d probably just spend it all like 95% of Americans. Only an idiot would buy stocks if the stock market was expected to continually decline in value, right?

But this article isn’t actually about saving and investing, even though that’s always the best option. Today I actually want to talk about the other side of the equation that dominates most people – spending money.

When talking about spending money, I like to categorize expenses into a couple of broad categories. The first involves purchasing memories in the form of vacations, meals, and other similar experiences that last only a brief while. These expenses don’t involve tangible goods or property. After the money is spent and the experience is over, all that remains are the memories.

Memories can get really expensive, really quickly. The only way to reduce the price of memories is to properly plan ahead. For example, you can vacation for free by travel hacking. You can invite friends over and cook at home instead of dining out, or you can choose to eat at restaurants that offer coupons or great deals. If you impulse spend or continually pay retail price for any of it, you’re probably going to be broke.

And before I get any commentary shouting at me, “but memories are worth paying for!” please know that I partially agree. The greatest joys in life often involve memories with friends, family, and other worthwhile souls. But whoever told you that memories cost a fortune? That’s just not true. By properly planning ahead, embracing frugality, and avoiding impulsive, emotion driven transactions, you can create an unlimited amount of memories for roughly a nickel a piece (I’m keeping track)(I’m joking, but they don’t cost much).

Most other expenses in life involve the exchange of physical goods or services. Someone produces a product, and sells it to a willing buyer. Examples would include cars, electronics, clothing, furniture, dishes, housing goods, and pretty much everything else that you purchase in a local shop.

This category of expenses seems to be especially problematic for people. Any time the average American needs something, wants something, or covets something, they run out and buy it at retail price. Some of these people know they are getting a bad deal when the pay retail, and just don’t care. Worse yet, others are somehow convinced that paying retail prices at big box stores like Walmart actually is a good deal. Go figure.

I’ve already written about the importance of buying used, so go ahead and read that first. The principle of shopping around and buying used is absolutely crucial. If you run out and buy something new, it is going to depreciate in value very quickly. If you ever try to sell that item, you will almost always receive less than the price you paid new. This holds true for almost everything you can imagine except for homes and other investments.

New cars are an excellent example. A new subcompact car (the kind you’d want for hypermiling) might cost $20,000. Two years and 22,000 miles later, it’s worth $12,000 if you’re lucky. And why is the value so diminished? Not because it has problems, or isn’t reliable, but because new car prices are heavily inflated to pay for shipping, dealer overhead, sales commissions, new car smell, and other ridiculous costs. You can buy extraordinary vehicles for $5,000-$8,000 all day long. I’ve bought roughly 10 of them, driven them around for a few months or years, and then flipped them all for a profit. Heck, the 1996 two-owner Saturn we share was only $1,700 when we bought it four years ago. It’s still running great.

I’ve always enjoyed playing video games, and I’ve owned almost every video game console known to man over the last 15 years. I have stood in line for more than 48 hours straight (2 full nights at Walmart!) to reserve new consoles at launch. Unlike many of my friends, my intent was not to play the systems, but to resell them at a fat profit to impatient people. When I’m looking to buy a console for myself, it’s all about the right one.

As an example, earlier today I found a Playstation 3 (PS3) on sale at a local pawnshop that I frequent. It included the console, 1 original controller, 2 decent games, plus the Playstation camera and Move controllers. After some negotiating with the manager, the total price out the door was $100.23 with tax. Are you kidding me? I could sell the bundle right now for roughly twice that price on Craigslist. But better yet, I could play it for 2 years with my brother, then sell it for $135 on Craigslist. I’ll make money on it either way.

That stands in sharp contrast with the twelve Playstation 4 (PS4) consoles that I purchased late last year at launch. Brand new, they were $435 with tax, and I averaged about $110 profit on each. People were willing to pay almost $550 per console. Sure, it’s their money and their decision, but that’s crazy! I’ll be able to pick one up for about half that price within the next few months. Why not just practice a little restraint and wait 9-10 months for demand (and of course, the price) to plummet?

Do you understand the importance of timing in this process? Timing is everything. So is patience. You’ll always pay too much if you are in a hurry to buy. And you’ll always make much less if you are in a hurry to sell.

I’ll wait patiently for months if necessary to secure a good deal. Unless I absolutely need the item, what is the hurry? Delayed gratification is good for so many reasons. It forces you to think about the purchase a little longer and decide if it’s wise. It also allows time to consider alternatives, do more research, and negotiate with sellers.

The same holds true when selling. Are you in a hurry to sell? If you are, people like me can smell it. Try to avoid being a rushed seller, because it’s not profitable.

If you aren’t desperate for the money, you don’t need to sell the item today after you get one low-ball offer. Take your time and list the item for more than it’s worth. And don’t be shocked when someone offers the full asking price without any negotiating. It happens all the time.

We can take selling one step further. Sometimes it is necessary to sell an item before it breaks or you get bored with it. We’ll go back to video games because they are yet again, a great example. Nintendo released a console in 2006 called the Wii, and subsequently released another console in 2012 called the Wii U. I owned the original Wii for many years, and was aware of the date on which they would release another console.

It was not difficult to predict that the price of the original Wii console was going to plummet once the new console was released. That happens with every electronic. In light of that, I sold my Wii 8 months before the new consoled released, and locked in a reasonable sum of money. Had I waited 6-8 months, I would have received half of that amount.

This happens ALL the time, and goes to show why timing is crucial in buying and selling.

Selling an older car while it still runs well is often a great idea. Instead, many people wait until it’s broken down to sell, then basically give it away. Why would you do that? Almost any well running car with less than 200,000 miles is worth $1,500-$2,000 if you’re a patient seller. Why wait until it’s worth $450 to sell? Take the money off the table by selling it, then supplement the sale price with a little savings and purchase a nicer car.

These methods work on cars, or video games, or computers, or furniture, or anything else you can imagine. Being patient and timing the market will allow you to secure an unlimited number of good deals.

And what exactly is my definition of a good deal? Well, it’s pretty simple when we are talking about anything that can be resold. A good deal is the price at which I know I won’t lose money when I’m ready to resell the item at some point in the future. At first glance, this may seem crazy. Do I actually believe that I can buy most goods, use them for a period of time, and then resell them without losing money?

Absolutely I do! I’d take it one step further and suggest that most of the time it’s possible to buy, use, then resell at a profit! That is always my intent when I begin hunting for any item.

It doesn’t matter what item we’re talking about, the process is the same. It first involves research to find the lowest retail price point. Then it requires considering used options and evaluating prices on sites like Ebay and Craigslist. Finally, it requires patience and diligence to find the one you want, at the lowest possible price.

Pick anything that can be resold, and I promise that someone is selling it used for way too cheap. It’s your duty to hunt, search, and peck your way to profit. If you’ll embrace patience and self discipline in the buying process, you’ll always find inefficiencies and anomalies that are ready to be exploited in the marketplace. Take advantage of that and you’ll never lose money!


  1. Avoid impulse purchases. Always do research before you buy.
  2. If at all possible, look for a used version of the item. The original buyer ate most the depreciation.
  3. Be patient when looking to buy. Always evaluate the options, look around, and take your time.
  4. Make low-ball offers when you aren’t in a hurry. Never be in a hurry!
  5. Negotiate for the item and don’t buy unless you are getting a good deal.
  6. Evaluate purchases in light of their future value. A good deal should allow you to sell the item in the future without losing much, if any money.
  7. Sell stuff you don’t use. List it for more than its worth and lower the price slowly.
  8. Sell stuff at opportune times. Don’t wait for the upgraded version to hit the market. Don’t wait for stuff to break. Sell now, then buy again later when the price plummets.
  9. Always be patient in buying and selling. Let other people pay the impulse premium.
  1. Reply

    I like your idea of buying a used car vs a new one especially if you are just doing short commutes to work and stuff. Do you think buying a house is a wise investment? How can I check if a house will appreciate in the next few years?

    • nick
    • June 26, 2014

    Had to share this with you jacob… combines your Craigslist methods with what you are saying with sort of renting items using for a short time and then getting rid of. So I originally bought a really nice sony laptop for 100 dollars….offered that for trade for a really nice movado watch….probably retailed for like 60o……traded that for an ipad2 case and 50 dollars……so already I have only really spent 50 dollars from my original investment. ..played eith the ipad for a while….trade that for a galaxy note 3 and an otterbox. ….used that for a while… I thought man its summer I would love to have a scooter or something fun……look up to see a person offering a 2012 scooter up for trade…..I offer him my note 3 (remember I technically payed 50 dollars for…..a 50 inch led tv that I fixed for a total cost of 80 dollars including the price of the tv and a gamboy 3dsxl that I scored for 80 bucks… of everything traded 210 dollars!!! The scooter new which they still make is 1800 and he was going to sell for 900… like you said I got to have cool gadgets that I easily get bored with play with them for a while and trade them for something much more valuable. …this also goes to show how much perceived value is to people….to me it was 210 dollars to him he got a killer deal becaus he probably would have paid cash way more……now working on trading the scooter for a car or something more valuable……love your blog btw….keep sharing your stories ill keep sharing.mine……happy days to all. -nick

  2. Honestly this is something I’ve attempted to do pretty often and want to continue doing in the future. It hit me the other day when I was walking around and check out a few garage sales even. There are so many purchases where individuals waste money, and I could purchase some of these items for next to nothing and resell online. Electronics are horrible when it comes to depreciation, honestly it makes me cringe when I think about the laptop I’m using right now and how much its decreased in value since I bought it 2 years ago…

  3. Never be in a hurry! That’s a beautiful truth right there. My experiences with that have mainly been with cars. The first car I bought I was rushed into it by my dad because he didn’t want me driving his anymore. The second one I had all the time in the world and it was an awesome deal. The same goes with our most recent purchase.

    It’s all about not being desperate–or at least not seeming desperate. Those sharks can smell it.

  4. Reply

    I’ve been trying to say this for years. I’m totally with you. We pretty much “borrow” items for a few years at a time and then sell them. We’ve taken it one step further using the “Buy Nothing” Facebook group for getting free stuff, and giving away things for free. It’s part of “the gift economy”, and it’s pretty awesome.

    And I’m with you on cars as well. Depreciation is the #1 financial cover-up in America, and no one seems to notice or care that it eats away at their money BY THE THOUSANDS. I buy cars, drive for 5 years, then upgrade for the same price (usually a 5-8 year newer vehicle). It’s not too hard, it’s repeatable, and EVERYONE should be doing this. Not sure how to convince people of this, but I’m still trying!

    Great Post!

  5. But does your time have no value? Every one of the transactions you list takes time to complete. If you buy something for $100 and then sell it for $135, unless your time is less valuable than that $35, you are losing money. Of course, there is a psychic utility involved in making a “profitable” transaction and there is a value to having used the items, if you have. So the calculation is not all that simple. Still, you have to include the value of your time in the profit equation nexus. Other wise, you are being misleading.

      • Jacob
      • June 9, 2014

      Great point Brad. I didn’t attempt to calculate the time component for 2 reasons:
      1) Buying or selling anything takes time. I don’t think it takes all that more effort to find deals and resell the items after some practice, but maybe I’m biased.
      2) Flipping items is something I enjoy doing, almost a hobby of sorts. You hinted at this when suggesting my personal utility gained from the experience.
      That said, I think your point is valid, but unless someone is very wealthy, this should provide a valuable return on their “investment” of time.

    • Older Gentleman
    • June 8, 2014

    Basic principle is to spend less than you earn. Max out your IRA.
    Some people , maybe most, desire to live above their means and purchase cars they cannot afford and etc. Others are wired differently. I wonder if frugality is inherent, cultural or what leads to this behavior vs spendthrifting? I am 64 and have done Very well financially over time and am able to retire at will now. I have friends who earn much more , but over spend, and can’t retire. Their portfolio won’t allow it. In your 60s you just get tired. So many Americans are stuck at my age, many more will be stuck. The savers only can get unstuck. So invest.
    All this came from the power of compounding and staying invested in the Market. I invest and hold for decades. Got very lucky with Apple Stock. Am actually looking at boats today to enjoy when I stop working. I am smart enough not to do that, but I have the money.

      • Jacob
      • June 8, 2014

      That’s a place to start, but not the end goal. Simply “spending less than you earn” won’t do much if you’re only saving 5% in a retirement account. You’re still a slave to your lifestyle. Saving 50%+ gives you freedom to choose your path, job, etc.
      Thank you for sharing your story. Sounds like you are in a great spot and offered readers some great advice on holding index funds for decades. That’s how to grow wealth!

    • Mimi
    • June 7, 2014

    Aside from doing MS to earn miles/points for a grand vacation, my husband and I have also discovered that attending timeshare presentations that give us free 3D/2N resort/hotel stay is worth our time to sit and listen to their presentation. The 90 minutes we spend is well worth the amount of money we save that we use for other vacation activities. I know other couples who do the same for cash incentive averaging $120 for their time. I have to warn those who can’t say no or are easily intimidated to sign the contract just to get out of there, don’t attend or you might regret it.

      • Jacob
      • June 8, 2014

      Thanks for sharing Mimi. I know a few people who have done the same. Where do you find those timeshare offers?

  6. This is a really cool way to live if you enjoy the hunt! I generally hate the “errands” part of life – lines, listing things for sale, buying stuff that isn’t delivered directly to my door, etc. So I generally hunt around online for a price that is lower than retail and acceptable to me. Then I use whatever it is for as long as it works. I had the same laptop for 8 years before it started dying sporadically, and now I use the new laptop my parents gifted me for Christmas/my bday this past December. I wanted a new, super reliable car that makes good gas mileage that I can drive for 10+ years, so I bought a new Honda Fit. But I haggled one down to $16,356 drive out instead of the $19,000-$20,000 that everyone had them listed at. Based on the 2006 model sales now, it looks like a Honda holds it value dang well in case I ever do want to sale before I run it into the ground. Overall, your way of saving/spending is great but there are other great ways too. 🙂

      • Jacob
      • June 6, 2014

      To each his own! 🙂 Thanks for sharing your thoughts.
      Buying online is great for small necessities, but really missed the point on big ticket items. It’s not possible to have everything delivered to your door, and it certainly doesn’t ensure an attractive price point. And it doesn’t always make sense to depreciate an item to $0 (when it breaks). Often, you can do better by selling it and buying an upgraded version used.
      I disagree on cars. New car depreciation is a fact. Statistically, a 2-year old model is still likely to run 10+ years with routine maintenance. You’ll just get a 40% discount upfront…

  7. Reply

    We want to create memories, and they don’t always have to be expensive. A walk down the beach, a picnic somewhere pretty or just spending time together doesn’t have to be expensive. It’s crazy how much people are willing to spend on new consoles just so they don’t have to wait!

      • Jacob
      • June 6, 2014

      Not just consoles, but everything in life! Patience is key!

  8. Great article. Our family buy used all the time with the identical thought as your PS3 example. When buying used and still selling the item when we are done, we are barely paying anything in the end. And sometimes, depending on how cheap we found the item initially, it ends up being free or we get paid for using the item! 🙂

      • Jacob
      • June 6, 2014

      Exactly! Always try to make money on the flip, and at a minimum, lose very little.

  9. When Samsung S3 arrived a few years ago, I really wanted it so bad! But when I looked at the price, I decided to wait for a few months and maybe the price will decrease. And during the Christmas Eve, I was so surprised because my husband gave me my dream mobile the S3, I almost scolded him because it was so expensive, but he told me that he bought it with a lower price because of the Christmas season sale.

  10. Great post very informative. Especially like the idea of reselling brand new consoles. Will have to try that!

      • Jacob
      • June 6, 2014

      The don’t release often, but there is money to be made each time.

  11. Reply

    Hi Jacob. That was a very good insight!
    For some, your approach might look like very utilitarian, without any emotional attachment to money. But I believe if the goal is to never lose money then this is the right attitude for those who want to reach it or even live with it as one of many important life’s values.

      • Jacob
      • June 6, 2014

      Thanks for reading Paul! Perhaps my approach is utilitarian. At the very least, it’s efficient.

  12. Reply

    I just recently went on a vacation, and we planned minimal activities. It was more important for us to create our own memories and spend quality time together rather than to go different places. All memories are not expensive, at least they don’t always have to be.

      • Jacob
      • June 6, 2014

      Proper planning seems to always result in lower expenses!


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