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Turn to eBay, Craigslist to pay down debt

Allie Johnson

October 27, 2014

Struggling to pay off a credit card balance? Your attic, basement or junk room might be full of unused stuff that could make a big dent in your debt.

“Selling unwanted items is one of the best ways to earn extra cash to pay down debt,” says consumer money saving expert Andrea Woroch. An average consumer might be able to mine their house for several thousand dollars worth of stuff, says Carolyn Schneider, author of “The Ultimate Consignment & Thrift Store Guide.”

Start in one corner of your house — for example, a closet, says Sally Reinholdt, a professional organizer based in Washington, D.C. She recommends taking everything out and sorting items into three bins: Keep, donate and sell. “You might find buried items you haven't seen in three years,” she says.

Turn your junk into treasure, then pay down debt

If you don't have much stuff of your own to sell, strike a bargain with a relative or close friend: Organize their messiest room in exchange for their unwanted items, Reinholdt says.

“That seems like a pretty good deal,” she says.

Get the most bucks for your stuff

Now that you have some things to put up for sale, think about the best way to vend them to maximize your return, Schneider says.

A September 2014 report from Consumer Reports on selling unwanted items advises consumers to “match your goods with the best places to sell them.”

Local consignment shops work well for selling stylish, gently used clothing, bags and jewelry, Schneider says. Craigslist is a good way to unload appliances, big-screen TVs, furniture and other items that are too large to easily ship to a buyer, says Woroch, who made $25 by listing an old dresser. “It really makes sense for big-ticket items,” she says.

Here are some questions to consider when deciding where to sell:

  • How much is your item worth? If you think an item might be worth $1,000 or more, consider taking it to an appraiser, Consumer Reports recommends. Or, if you have something unusual — such as a piece of original art, rare vintage Levis or something that belonged to a celebrity — you can email a photo of it to an auction house in your area to get an opinion on its worth, Schneider says. Valuable items are best sold at auction, she says.
  • Are you willing to split your proceeds? It's free to list an item on Craigslist or hold a yard sale. But you'll have to pay a fee or a percentage of what you make if you sell at a consignment shop or an online auction site such as eBay, Woroch says, adding that eBay might take 10 percent while a consignment shop might keep 60 percent. Get the terms in writing ahead of time, Schneider says.
  • How much time do you want to invest? Some sales methods might bring in more money but also require more time and effort, says Woroch, who sells stuff on eBay. A consumer who wants to spend less time could sell a piece of clothing or a handbag on a site like ThredUP.com that lets you print a shipping label and pays you 10-35 percent upfront on some items, she says.
  • How long are you willing to wait for your money? Selling on consignment can take a while, says Schneider, who says she makes a note to check back with the shop owner about her item 60 days after she drops it off.

Use your proceeds to tackle debt

Now that you've gone to the effort of finding stuff and putting it up for sale, you want to make sure to use your profits to help you get out of debt.  Here are four tips:

  1. Assess your debt. If you owe on multiple cards, make a list of the balances and interest rates on all of your cards. Then, put the money you make from your sales toward the debt with the highest interest, Woroch recommends. “That's the debt that's going to cost you more over time.”
  2. Put some of the money in savings. If you don't have an emergency fund, use half of your proceeds to start one, and put the other half toward debt repayment, says Mikelann Valterra, a money coach and co-founder of spending plan software MoneyMinderOnline.com. Then, the next time your car tire blows out or your hot water heater busts, you can avoid adding to the credit card balance you just paid down, she says.
  3. Deposit cash right away. Just made $50 selling your mid-century coffee table on Craigslist? Head straight to the bank after the buyer hands you the money, Woroch says. “Don't put that cash in your wallet or you'll be tempted to spend it,” she says.
  4. Make lots of mini payments. To chip away at your debt faster and avoid temptation to spend your proceeds, make an extra credit card payment each time you sell something, Valterra says. Even if you bring in only $20 selling some books or a dress, use that cash to make a payment, she says: “There's no penalty for making four or five payments a month.”

It pays to always be on the lookout for things you could turn into cash, Valterra says. “If you're not using stuff that's in your basement, closet or garage, why wouldn't you sell it?”