Seen Something for 70% Off or More? Buy It.

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That title may seem like strange advice from someone like me, who wants you to spend money wisely and live large on a small budget. Simply throwing your money away on stuff you don't need just because it’s massively discounted is hardly good frugal advice.

Or is it?

You see, there’s a word I have just discovered — arbitrage. It’s most commonly used in the stock market. Here’s the definition, courtesy of Merriam Webster:

“The nearly simultaneous purchase and sale of securities or foreign exchange in different markets in order to profit from price discrepancies.”

It’s a bit dry, but the practice can be summed up as “buy low, sell high.” Now that’s fair enough in the stock market and if you’re in the wholesale business, but what about the casual eBay or Craiglist user?

Well, it works in exactly the same way. And if you’ve got a keen eye and a few bucks set aside, it can be a little sideline that can become very profitable.

So if you want to take advantage of arbitrage and put some extra bucks in your pocket before, during, and after the holidays, here are some tips on finding deals and making a tidy profit. (See also: Get a Deal Every Time You Shop With These Tools)

1. Always Check the Clearance Shelves in Target and Other Stores

I zeroed in on Target because I get my best profit margins from their sales. For some reason, Target just seems to drop prices dramatically on some items at various times of the year, and they pay off quickly. Scour the end caps and find items that are in pristine condition, are heavily marked down, and have a good chance for resale.

2. Look for Deals Other People Would Want, Not Just You

This is a golden rule. If you look through the shelves and see nothing that interests you, don’t walk away. I recently purchased a bunch of exercise equipment that I will not use because I have a gym membership and go regularly. But these pieces of equipment (kettlebells, steps, free weights) were marked down 75%. I sold them just a few weeks later for twice what I paid for them. The buyer got a deal, I made some money, and the store got rid of unwanted stock. Remember, one man’s trash is another man’s treasure.

3. Amazon’s Gold Box Is a Treasure Trove of Deals

Amazon has Gold Box deals every day, and sometimes they give you awesome savings. Again, remember the golden rule…is it something someone else would pay more for than you're paying right now? If it is, buy it and resell it. Also, Amazon has some crazy sales that you can take advantage of. When it's 70% off at Amazon, you can sell it for a very handsome profit and still give someone else a deal.

4. Take Advantage of Groupon, Living Social and Other Middlemen Sites

There are maybe one in 20 Groupons that actually interest me. But there are many more that are deals for somebody, somewhere. If you’re getting 69% off a piece of audio or video equipment, chances are you can sell that for a tidy profit.

5. Buy on eBay, Sell on eBay. And Craigslist. And a Combination of Both

Let me start this with a small but crucial piece of advice — eBay is not the cheapest source of any and all products on the market. You may think that because the items on it are being sold by individuals or businesses with very little overhead, you will always get a deal. Not so. Now, that doesn’t mean you won’t find a bargain, but like I tell everyone, shop around.

Saying that, you can get some great deals on eBay and then turn right back around and sell them on eBay again…in a different category. For instance, someone may not realize that they have a valuable collectible, and be selling it in something like household goods or accessories. But place that same object in a different category, like Tobacciana, and you could get quadruple what you paid for it. You can do the same with Craigslist, and go back and forth between the two.

6. Take Advantage of Seasonal Sales

If you have the storage space and the patience, you can take advantage of the sales every few months. When Halloween goods go on sale for 75% to 90% off, scoop the good ones up. Then list them around August next year for a nice profit. The same goes with Christmas items, Easter, Mother’s Day, and so on. Even things like winter snow shovels, sleds, summer beach buckets, and leaf rakes for fall will all have their golden selling period again. Organize your basement or attic well, and there’s profit to be made all year long.

7. Charity Stores Are a Goldmine…and Now You Have the Key

Places like Goodwill have always been a treasure trove of goodies, if you know what you’re looking for. And therein lies the problem…or at least, it used to. Back in the day, it would take an experienced collector or reseller to separate the gems from the duds. But now, if you own a smartphone, you’re armed with a world of information. All you need to do is trust your gut instinct and do a little research right then and there in the store. I did it recently with a camera lens. It was priced at $3.99. Used, but still in the box, not a scratch, and a good brand name — Pentax. But the camera market being what it is, I wasn’t sure if it was just obsolete, so I did some digging on my phone. I found it selling on eBay for around $80, so I snapped it up. I probably would have bought it anyway, but now the risk involved is minimal. If you see something you think is valuable, you can usually find out on the spot if you’ve got a deal.

8. Don’t Tie Up More Money Than You Can Afford

If you see a killer online deal, you may be tempted to buy dozens, or even hundreds, of products to sell for profit. But that can backfire horrendously. I saw a movie T-shirt recently for a crazy price at Kohls.com and was ready to put $500 down to buy a ton of different sizes. Then I did some digging and found the same shirts selling on eBay at the same price as I was ready to buy them at. Sometimes those great deals are marked down because of current market prices, or they were artificially inflated in the first place. Either way, I would have had to go to the trouble of returning them all and having my cash tied up. In some cases, you may not able to return your purchases and will be stuck trying to sell them for months, or even years. And that leads nicely to the last point…

9. Market Research Really Pays Off

EBay has a list of hot products that it updates regularly. That’s a good place to find out what’s selling and what you should be trying to buy cheap elsewhere. Also, look at the latest trends. If you see movie or TV show items going cheap, they probably have a following on eBay or Craigslist. Keep a list on you, or use your smartphone to Google current prices before you purchase.

That’s my list, and it has worked amazingly well for me. Do you have any tips to add? Have you made a killing from a thrift store or eBay purchase? We’d love to know.