The Second Hand Economy: How To Make An Extra $4,000 A Year

How to make 4,000 a year from your 'junk'.

When Tracey O'Malley and her partner Tom decided to renovate their home there was one major cost they didn't factor in -- dumping unwanted items at the tip.

"We found dumping is so expensive -- $4000 on just tip fees, we didn't realise it would cost so much," Tracey told ten daily. 

"Now we just put it online and in a day or two day people take it and goes to good use." 

By getting involved with Australia's $34 billion second hand economy by shopping on sites like Gumtree, O'Malley has managed to save $40,000 in the last two years when renovating her home.

"People have just changed their mind and they can’t return the item so they just sell everything. You have to compromise with your style and work with what you have got and be flexible." O'Malley said. 

Tracey and Tom have brought almost everything in their new home through the second hand economy including a fire place for $200 that was originally worth $3,700 and their entire kitchen, including main appliances, for $2,500 when its market value is approximately $15,000.

Tracey's kitchen cost her $2,500 instead of $15,000. Image: Jade Place Makeover/ Facebook.
So what's Tracey's secret?

She says you've got to be fast.

If you really want something, call the seller, don't just send a text message. She also said knowing the retail price for the item you want will help you calculate how much you're saving.

"The first thing that's really important is you have to know the value of what you are looking for and know what you need and ... know the value it retails at," O'Malley said.

She also said not to shy away from bargaining.

Tracey's $200 fire place. Image: Jade Place Makeover/ Facebook.

"After two or three days [of the item being online] you should be able to get a cheaper price so it is worth asking.

"If it is a hard item [to sell] I always message them to see if they will halve the price -- you can always save a little money by asking."

Each Aussie HOusehold Could Make $4,200 A Year

The second hand economy is accessible to all age groups. The eighth Second Hand Economy Report released by Gumtree estimates that each Australian household could make up to $4,200 annually by simply selling unwanted items lying around the house.

Clothing and shoes are the most common items sold on the second hand economy. Image: Getty Images.

Eighty-nine percent of Australian households have 25 unwanted or unused items in them just waiting to be converted into cash. The most common unwanted or unused items in Aussie homes include clothing, shoes and accessories followed closely by books and CDs and DVDs.

While only 56 percent of people sold something second hand, 90 percent of people bought something. The leading age group capitalising on the second hand economy are millennials who make nearly $2,000 per seller a year by selling things they no longer want or need.

Sixty-six percent of Generation X and just 48 percent of baby boomers said they would also consider selling  items second hand.

Millennials are earning much more than the average seller through the second hand economy.  Image: Gumtree
Tips

One of the reasons people aren't getting more widely involved in the second hand economy is because of time.

In fact, 37 percent of people said not having enough time to buy or sell items is the reason they are not involved. Lack of time is closely followed by people being unsure about which items in their house are worth selling and which are not.

Here's a few handy expert tips about how to get into the second hand economy.

Declutter -- Founder of SugarMammaTV Canna Campbell says decluttering is the very first step to getting involved in the second hand economy. By doing a solid clean out, you're sure to discover forgotten items you had stashed away.

Decluttering is a great way to find items that you could sell to make some cash. Image: Getty Images.

Set And Forget -- Campbell also said selling unwanted items establishes financial freedom. By saving the money you make from second hand selling, you'll create a fund for yourself instead of mindlessly spending.

Get A Car Record Report--If you are buying a car second hand you can purchase Car Record Report for around $20. According to car expert Chaz Mostert this check shows the vehicle's engine info, safety ratings, odometer comparison and valuation all before you go to look at the car.

Ask For A Video Demonstration -- By asking a seller for a video recording of the device in action, anxiety about buying an item second hand will reduce according to technology commentator Trevor Long. Videos are especially useful for electronic devices as they are a sure way to ensure features like Bluetooth are in working order.

Think Ahead-- Long also suggests thinking ahead to how you might resell something at the time you buy it new. Would the packaging need to be in tact?How should the item be protected and preserved? These small considerations can add heaps of value when it's time to resell.