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A common piece of frugal advice is to hang on to something until you cannot use it any longer. While this is good advice for a T-shirt or a car that doesn’t require costly repairs, it might not be the wisest advice when it comes to technology.

Every year there are new phone, laptop, and camera models; the device you are currently using to read this article will be obsolete in only a few years. But buying the newest tech when it comes out 5 Reasons Why Being An Early Adopter Is A Bad Idea 5 Reasons Why Being An Early Adopter Is A Bad Idea Are you the type of person who pre-orders the newest tech gadgets as soon as they’re available? Then you’re an early adopter. Is there a downside? Let's find out. Read More is not budget-friendly. To remain frugal and to get the most return for your tech investment, you need to find the sweet spot of buying and selling gadgets How to Safely and Profitably Sell Used Gadgets on Craigslist How to Safely and Profitably Sell Used Gadgets on Craigslist Selling used gadgets on Craigslist can be a scary proposition, both for your safety and your money-making prospects, but these tips will help you make the most of it. Read More .

Here are a few important things to keep in mind.

Obsolete Gadgets Are Harder to Sell

When you use a certain gadget until it is obsolete, you then lose out on getting a decent amount of money back when you sell it. If that technology is more than five years old, what motivation would buyers have to buy your used item at top dollar when they can usually score a better deal on refurbished items How to Buy Refurbished Mac Laptops and Save Money How to Buy Refurbished Mac Laptops and Save Money Apple's natural stranglehold on the Mac market means discounts on their hardware aren't frequent. That said, you can get a Mac for less — you just need to know where to look. Read More that also come with a manufacturer’s warranty?

Let’s do some math. Say you bought an unlocked 16GB iPhone 4 for $649 when it first came out in June 2011. You thought you were being frugal by using the same phone for five years. Wrong! Not only are you probably experiencing a slower device that takes lower-quality photos, but the phone is now harder to sell.

iphone-size-review

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The current average sale of the iPhone 4 on eBay is about $41, including shipping, but excluding fees. The $649 original price minus a resale of $41 leaves you with a final price of $608. Divide that by five years of use, and you get $121.60 per year.

If you had upgraded your phone every two to three years instead, and sold your old phone before the price dropped significantly, then you would decrease your use cost per year. I bought an unlocked 32GB iPhone 5s on eBay in September 2015 for $287. Several similar phones recently sold on eBay for about $225. If I sold the phone today for that price, after subtracting shipping and fees from my costs, my phone would have cost me about $85 for nine months of use, or about $9.50 a month, which works out to about $114 per year.

In this case, it would be better to wait on updating, since the phone is still current and the price will not drop too significantly in another year. Even if I sold the phone in September 2017 for $150, I would make about $122 after fees and shipping. This would leave me with a loss of $165 and cost me about $82.56 per year.

Repairing or Replacing Gadgets Is Pricey

Also, if you wait until your gadget breaks or becomes too obsolete to use, you run the risk of needing to replace it at a premium price.

For example, if you use a laptop every day, and it breaks, you must then find a quick replacement or pay a lot of money out of pocket to have it repaired. You won’t have the time or flexibility to bargain shop. You might even be tempted to pay full retail for a bargain computer that will need to be replaced again in another year or two.

computer-tech-repair

The average life span of a laptop is about four years — at this point, the hardware begins to age and become dated. Of course, some people use their laptops much longer without any issues. For my own laptops, I try to buy one that is a few months to a year old. Then I will sell it within two years, making back most of my investment.

If You Aren’t Using It, Don’t Let It Cost You

Most people have two to three gadgets that have very similar functions. This is especially true for Apple fans. My own household has two iPhones, one iPad, and one iPod touch — four devices that do almost the same thing. Because of device overlap, some gadgets do not get much use, but owners are hesitant to get rid of them. Why sell a gadget if it could still possibly be useful? However, letting your unused gadget just sit on the shelf is costing you money.

I bought a 16GB Apple iPod Touch, mid-5th generation, over a year ago on eBay for $88 plus $12.99 shipping. I bought the gadget to use as a Wi-Fi baby monitor How To Build Your Own Baby Monitor How To Build Your Own Baby Monitor If you're a recent parent, you've probably considered getting some sort of baby monitor. You possibly considered the utility of a video monitor and then you may or may not have balked at the exorbitant... Read More , but ended up not using it at all. I have the chance to sell it on eBay for $90–105 with shipping.

ipod-touch-ebay

If I sold the iPod for $100, shipping included, then I would pocket about $80 of that after shipping, eBay, and PayPal fees. The iPod Touch would have cost me $21 per year to use.

However, if I hesitated on selling the gadget for another year, the selling price could drop, especially after the new Apple products are released. Next year, my current iPod might earn me $65 on eBay, including shipping. After all the fees, I would profit about $48. The device would have ended up costing me $52.99 to use it, or $26.50 per year to use. While that might not seem like a huge difference, realize that the gadget would probably have gone unused for another year, essentially wasting money.

Finding the Sweet Spot of Buying and Selling Gadgets

There is definitely a sweet spot when buying and selling technology. You don’t want to buy a gadget when it first comes out. You also don’t want to wait too long to sell your old gadgets How to Make More Money Selling on eBay How to Make More Money Selling on eBay To maximize your earnings on eBay, you need to take a number of factors into account; we'll walk you through the best way to get the most out of your auctions. Read More . Finding the right balance between the two will allow you to have the lowest cost per year on your gadgets.

tablet-sell

Generally, I will buy the latest technology secondhand The Ultimate Guide to Buying Used Devices The Ultimate Guide to Buying Used Devices I bought my current laptop, a 2011 Macbook Pro, on Craigslist almost four years ago. Here are some tips I picked up during my quest. Read More . I usually buy it six months after the release or even right after Apple releases its newest device. I only want to be two to three steps behind the latest release, if possible. For selling, I try to sell when a gadget is about three years old, before the next big tech release.

Sometimes this strategy leaves me without a certain gadget for a few weeks. Since we have so many gadgets at my house, it is easy to use something else while I wait for a good deal. For example, my husband always has a phone that’s slightly newer than mine. Therefore, when it is time to update, my phone will be sold, and I will take over his phone. He will switch to his work cell for a few weeks and get a used newer phone.

Time and Savings Analysis

This might sound like a lot of work, but it truly isn’t. I don’t keep exact charts of when one of my technology needs to be sold, nor do I keep detailed accounts of how much money this process has saved me. It is more of a “my laptop isn’t performing at its peak anymore” or “I just heard the rumors about the new iPhone” thought process that remind me to research the going price of my current technology, as well as how much it would cost to replace it.

time-vs-money

I have been on the unfortunate end of needing to pay a lot of money to replace and repair my laptop when I let it get obsolete. I have also watched my friends get the latest iPhone with their phone company’s expensive payment plan Never Buy a Phone From Your Carrier! Buy Unlocked Phones and Save Hundreds Never Buy a Phone From Your Carrier! Buy Unlocked Phones and Save Hundreds Never buy a smartphone from a carrier—ever. Most consumers don't know that they can purchase their phones from retailers and pay less than if they did from the carrier. The key word that you're looking... Read More , only to trade it in for the next model within a year, not realizing how much money they are wasting because it is only an extra $20 a month.

Now I own only Apple products because they retain their high resale value, and it is just my preferred technology. However, these strategies can be used with other quality brands and gadgets, too.

How often do you upgrade your technology? Do you try to get a significant amount of the original price back when you sell? Or do you use them until they’re completely worn out? Share your answers in the comments below.

Image Credit: Hadrian via Shutterstock.com, goodluz via Shutterstock.com, Production Perig via Shutterstock.com, Malashevska Olena via Shutterstock.com.

  1. steve
    July 21, 2016 at 9:24 am

    The basic saving preposition is to buy an item after its big initial depreciation and sell before the market for it bottoms out, secondhand car dealers have been doing it for years.

    But, as with them, the argument is pretty specious - it's only based on the hardware and not the total cost of ownership, ie: call plan, network charges, insurance, itunes (or other) fees etc.

    It's also based on the secondhand car dealers focused selling point - creating the desire for an apparent upgraded or premium piece of technology, when in actual fact, few if any of the 'shiny' additions have any long term use or are even of any value in the first place.

    BTW - you write - "For example, if you use a laptop every day, and it breaks, you must then find a quick replacement or pay a lot of money out of pocket to have it repaired. You won’t have the time or flexibility to bargain shop" - total nonsense, amazon etc and many refurbished equipment suppliers do next day.

    • Ashley Eneriz
      July 21, 2016 at 6:31 pm

      Thanks for your input. It is great that there are many refurbished equipment suppliers that do next day, and that is a great idea for others to check out. However, you are still at the mercy of what they have in stock, whereas if you knew you had a month to purchase a laptop, you would have more flexibility to bargain shop.

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