Wednesday, September 21, 2011

3 Personal Finance Lessons NOT to Learn from Storage Wars

I am a man of guilty pleasures; this I freely admit.  While I'm not a huge fan of reality tv in general, Storage Wars on A&E is a guilty pleasure of mine.  I am frequently in awe of the money that can be made from the abandoned units, especially from units that are apparently full of trash.

This is what came up in a search for trash. 
I am uncomfortable making any jokes about it.
For those of you unfamiliar with the show, each episode features auctions for unpaid/abandoned storage units.  There are four or five main characters who are primarily trying to make a profit from buying what is in the units for a cheap price, and then selling those same items at a higher price.  The catch to the auctions is that the bidders are not allowed to walk into the storage units; they have to base their bids only on what they can see.

One of the things about the series that draws me in is that I think the show describes a fun and interesting way to make money.  I also admire the series's regulars in their commitment and tenacity to making a living through arbitrage.  Plus, it is honestly exciting to see something rare and valuable found in a unit that was bought for relative pennies.

Even so, every episode has some combination of bad personal finance/business practices that SHOULDN'T be learned.  Here they are.

1)  Always Spend a Lot of Money When You Don't Know What You're Buying - It's true; the four main characters on the show are (apparently) able to make decent livings from the arbitrage between what they buy the units for and what they sell the individual items for.  Still, many of the most valuable items on the show are those that weren't readily seen prior to buying.  Therefore, many times, the buyers are paying a premium that isn't based on a full understanding of what they are purchasing.  This is a bad idea (not unlike my original round of purchasing and selling comic books on Craigslist).

2)  If You Have a Profitable Business, It's a Great Idea to Give Away Your Trade Secrets - For the first few episodes of the series, storage units generally went for a couple of hundred bucks a pop.  In more recent episodes, lockers (as storage units are frequently called on the show) have prices that are a lot closer to a thousand bucks than a few hundred.  What's changed?  Simply by creating the series, A&E gave a business idea to a huge number of people.  With more people trying to make their money the same way, the regulars on the series now have higher costs of doing business, especially since the basic idea of the show is something that anybody can do (although whether or not anybody can do it well is open to debate).*

3)  Definitely Leave Your Valuables in Storage Units You Don't Pay For - This is the basis of the show, and it never fails to amaze me.  While each abandoned storage unit has a different story of how it came to be abandoned, if I knew that I had something very expensive in storage, I would definitely not forget to pay the rent.  If I couldn't afford to pay the rent, I would AT LEAST go and get my expensive belongings.

Are you a fan of Storage Wars (or any other reality tv)?  Let me know in the comments.

*To be fair, there is a lot of overpriced junk being sold at the A&E online store that features the regulars likenesses, so one is forced to conclude that the regulars are making some money from the show that should offset any increases in overhead costs.

Photo Source

*Update 09/26/2011: This post was featured in the Carnival of Personal Finance #328.

1 comment:

los angeles probate loan said...

I love watching Storage Wars because I cannot believe the mistakes that people make that have become opportunities for other people to make money. We always hear about stories like these that are also eye openers even for experts.