There's a big difference between investments and expenses. An investment implies you expect to get some return on your money, while an expense is money you spend and never plan to see again.
Despite the vast difference in money-use methodologies, shoppers tend to get their terminology mixed up. "Investing" in an LCD TV or Blu-Ray player is a misnomer. Just like a new car, these items lose value as soon as you take them for a spin. Though most consumers are already aware of this detail, it doesn't seem to slow their interest when it comes to electronics. The Consumer Electronics Association projects more than $1 trillion in such spending this year, an increase of 5 percent from 2011.
With the Consumer Electronics Show wrapping up last week, tech fanatics everywhere have an itch for the next big thing. If you plan on scratching it, use these tips to help defeat depreciation.
1. Use the News
Nothing kills the excitement of a brand new gadget like discovering a price drop days after you've opened the box. In fact, many holiday shoppers are suffering through this exact scenario, thanks to a recent $100 price drop in several popular tablets. Avoid getting stuck in this predicament by tracking the news on products you're planning to buy. Big cuts are usually announced in advance to help stimulate sales.
2. Read Reviews
User reviews are a great place to start your electronics education. They'll help identify common problems so you can steer clear of troublesome products. Poorly reviewed items are usually the first to plummet in value, since manufacturers need to unload such inventory to make room for new, higher-quality products.
3. Cut the Initial Cost
There's no secret formula to preserving value, but there are plenty of ways to cut the initial costs. Find coupon codes for Dell, Newegg and other popular retailers on such sites as CouponSherpa. When making high-dollar buys, don't shy away from haggling, either. Most items include a certain amount of mark-up, and most managers would rather sacrifice a few dollars than lose the sale altogether. Just make sure you're prepared to buy, if they meet your price.
4. Protect What You've Got
You don't have to coddle your iPad like a newborn, but keeping it protected pays off in the long run. Simple actions like adding a screen protector and case ensures a longer, healthier life for your gadget. It also helps preserve any resale value you hope to get in the future. Don't bother buying brand-name, though. Quality cases, cables and covers are abundantly available online for a fraction of the price.
5. Quality Matters
Though low price-tags can tempt even the most careful consumer, it's best to avoid the cheapest of the cheap. Simple logic should tell you there's a good reason for an item being priced $100 less than its closest counterpart. When you're already laying out a good chunk of change, it's often worth spending a little more for quality. A Forbes.com article notes that Apple products tend to retain their value best, in comparison to other computers and electronics.
6. Wait it Out
At some point you have to put a price-tag on bragging rights. Is making your friends green with envy over your 3D HDTV really worth a few hundred dollars? Electronics are never at a higher price than when they're brand new. Ignore the hype on new releases and give yourself an extra six months before buying. While the waiting seems interminable, you'll get a good understanding of the item's quality and can still keep an eye out for special offers and sales.
7. The Old Switcheroo
One of the best ways to enhance the value of your electronics is making a trade. Your two-year-old HDTV is as good as trash to a major retailer, but someone just upgrading from tube technology would consider it a treasure. Using sites like Swap.com or even Craigslist to trade unwanted items lets you assign your own value and keeps unnecessary waste out of landfills.
8. Beware of Buyback
Many popular merchants now offer buyback programs promoting value preservation for customers. However, some of these programs are quite counterproductive and come with many restrictions. For example, the maximum possible payout from Best Buy's Program is only 50 percent, and that's within the first six months. The retailer's program also requires you pay a fee to participate and discretionary details, like product condition, can significantly detract from the resale value. When considering a buyback program, look for one that doesn't cost extra and provides payment in cash, not just store credit.
Andrea Woroch is a consumer and money-saving expert for Kinoli Inc., and has been featured among such top news outlets as Good Morning America, NBC's Today, MSNBC, New York Times, Kiplinger Personal Finance, CNNMoney and many more.
I'm a former 7th grade Science teacher turned stay-at-home mom that lives in Houston, Texas. I am married to my college sweetheart and have a beautiful daughter named Riley, who definitely keeps me on my toes! I am also involved in starting a small business which would both manufacture and sell an invention that I've patented, called Toothpaste 2 Go. I love interacting with my readers and hope to learn as much about you as you learn about me!