Here’s a guest entry from reader Cliff Barbier, who gives us the low-down on the world of cheap computing.

Computers permeate our lives. We bank on computers, we buy with computers, and we communicate using computers. Yet these machines still hold an element of mystery that makes some people apprehensive about how to spend less without getting shortchanged. I have been repairing and working on computers for a living for a decade now. Currently, I test the computer and information security of companies, especially banks and credit unions. I have done hard time in retail in the past, and I was broke for most of that time. Here are some tips and tricks I’ve learned to save money on computers.

How much should you spend on a computer?
Everyone knows that retail stores are overpriced, and charge way too much for computer equipment, right? Wrong. Stores like Best Buy, Circuit City, and CompUSA each have items they make a lot of margin on, and some they make very little on.

Did you know that the margin on low-end PCs is so small, that for some of them the store only makes $10 profit? Mid-range and higher-end PCs have higher margins by design, to reinforce the idea that “you get what you pay for”.

So what does this mean for you, the purchaser? It means that these low-end PCs are a great value for less technical users. A PC in the sub-$500 range is fine if you use a computer only for web browsing, emails, term papers, pictures, music, and keeping track of your finances. Don’t pay more for what you don’t need.

[Editor's note: The latest issue of Consumer Reports (June 2007) has a feature on buying new computers, including ratings on some popular models. This issue also has a feature on getting good tech support.]

The best way to breathe new life into your computer
If you already own a computer, you may wonder how you can squeak some more life out of it. The number one upgrade that will make your computer faster and more responsive is memory (RAM). Memory is where the computer does all of its work, and if it doesn’t have enough space there, it has to write it down to disk. Disk access times are measured in milliseconds (ms). A typical access time is 10ms. RAM access times are measured in nanoseconds (ns). A typical access time? Less than 10ns. You do the math. Doubling your RAM is usually the best way to go.

So where should you buy that RAM to put in your computer? Not at the retail store. Since they couldn’t make their money selling you the PC, they try to make it up in accessories. One example is USB cables.

When I worked for a big box retailer, I needed to buy a USB cable. So I went and took some off the shelf, and scanned it for the employee price. I did the math in my head and then, believing I misplaced a decimal point, I did the math on a calculator. The USB cable was sold at a 3,000% markup. RAM, paper, extra batteries, and other non-essential items are similarly marked up, though not at the same rate. Unless you need an accessory today, don’t buy retail!

To answer my question above, you want to buy the RAM and all other accessories online. Find a tech savvy friend or look up your computer’s information online to find the proper type of memory. Some of my favorite reputable online computer stores include TigerDirect and NewEgg.

While I worked retail, NewEgg‘s price with shipping beat my employee discount on every item I shopped for except one. Even then, online the item was 50% off the retail store price. You save a lot of money when you shop for computer accessories online.

Purchasing Microsoft products
For the slightly more tech savvy user, if you want to buy a new copy of Windows XP or Vista, you can take advantage of a loophole in the way that Microsoft’s purchasing rules are written.

Original Equipment Manufacturer (OEM) versions of operating systems are cheaper than the copies you find on store shelves. However, Microsoft requires the purchase of OEM editions to take place “with hardware”. Fortunately, a mouse counts as hardware. You can legally save money over so-called boxed copies by purchasing a mouse and an OEM version of Windows.

Microsoft’s other big moneymaking product is Office. Being the market leader, they make their money by keeping companies on the perpetual upgrade treadmill. Making money off of you, the individual, is just a happy side-effect.

If you find you need Excel or PowerPoint, but you don’t have $400 to fork out for Microsoft Office Standard, you do have a choice. Microsoft Office Home and Student (formerly Microsoft Office Student and Teacher Edition) includes Word, Excel, and PowerPoint, and costs $150 for a 3-computer license. The only restriction is that it cannot be used in a business.

An interesting aside: the last I heard, Windows and Office are the two products that make money for Microsoft. Most of their other business units lose money.

Free software alternatives
There is yet another alternative for the frugal software user. Until now our focus has been on reducing the amount we spend on computing. Now, we’ll talk about getting things for free.

If you think Microsoft Word and WordPerfect are the only games in town, then think again. AbiWord is a freely available and lightweight word processor for Windows. It reads and writes Word documents, as well as its own documents. This is not the only alternative to Word, however. Free office software has finally come into its own.

OpenOffice is a free office suite, complete with word processing application, spreadsheet application, presentation application, and a simple database application. It reads and saves Word, Excel, and PowerPoint files. The word processor (Writer) and spreadsheet (Calc) offer 80% of the features found in their Microsoft counterparts. The presentation program (Impress) is a little less functional, but is still usable.

The Gimp is another highly functional free software program that emulates 80% of the functionality of its paid counterpart, Photoshop. Simple to medium-difficulty editing can be performed with a program that costs nothing. For those used to Photoshop, The Gimp has a similar learning curve. But fortunately, tutorials are available to teach the ropes to those of us with zero artistic talent. I have used it to create pre-press EPS images, alter images, and create a fake logo for my job.

Thunderbird and Firefox
Now we come to two of the best-known free software programs out there.

Thunderbird is a freely available email program without the security problems of Microsoft Outlook or Outlook Express. It includes a spam filter that you train to recognize the emails that you normally receive. The more spam you get, the better it gets at finding it and filtering it out. The best part is, you can set it to not load pictures in emails, which is a common tactic spammers use to discover “live” email addresses.

Firefox is a free web browser available from the Mozilla Foundation. This is basically the next generation of the old Netscape web browser, and in fact, the newer versions of Netscape are based on this code.

Many people find Firefox quicker and easier to use than Internet Explorer. The ability to search through websites like Google, Amazon, and eBay is built right in, and other searches can be added for nearly any website you imagine.

The functionality of Firefox can be extended with add-ons for ad blocking, blocking Flash advertisements, and RSS readers, just to name a few. One of the biggest advantages of Firefox is that it is not susceptible to as many malicious websites as Internet Explorer is.

Coping with spyware
The number one type of service a computer repair shop performs is hardware upgrade/replacement. A close second is spyware or malware removal. There are a number of ways to reduce your chance of getting spyware, and thus reduce your chance of needing to spend money on service.

First, use Firefox and Thunderbird. As mentioned above, these pieces of software are less able to be exploited by malicious software authors.

Second, don’t download and run programs you aren’t familiar with. You think you’re just downloading the latest version of Snood, but it comes with a spyware chaser. [Editor: Snood is a hypothetical example. According to its author, "Snood does not come with anything except Snood."] My advice is to limit your free downloading to well-known companies or Open Source software. All of the free software mentioned above is Open Source, which means other people can look through it and know for sure that there’s no malware included.

Finally, watch out what peer-to-peer (P2P) programs you download and use. Many of the best-known ones have spyware and adware that support their development. My recommendation is to use Azureus, which is an Open Source BitTorrent client. Incidentally, everything you download from the SourceForge.net site, like Azureus, is guaranteed to be Open Source.

The wonderful world of Linux
Finally, the ultimate way to save money on your computer is to not use Windows at all. This is for the technically savvy and adventurous among you, or just the really hardcore savers out there.

It is possible to order a so-called “naked” PC from some online retailers, meaning it does not come with an operating system, which saves you about a hundred bucks. You can then install a distribution of Linux on the empty (and cheaper) computer. This operating system is entirely Open Source, and comes with free software already installed. My recommendation for new desktop users is the distribution named Ubuntu, or its cousins Kubuntu or Xubuntu.

As of May 1, Dell now offers Ubuntu pre-installed on some systems.

If you want to try Linux before you take the plunge, it is possible to download a so-called “live CD” of these operating systems which you can use to boot up an existing computer without erasing the hard drive. FYI, because this runs off the CD, it will be slower than normal. Linux is usually much quicker than Windows on the same hardware.

OpenOffice, The Gimp, Thunderbird, and Firefox are all available for Linux as well. Linux is not vulnerable to any known spyware, malware, or adware.
There’s also a wealth of free software available for Linux, including:

  • GnuCash for finances
  • Pidgin (formerly GAIM) for instant messaging (also available for Windows)
  • Rhythmbox for syncing music with iPods
  • F-Spot for photo management
  • Something called Beryl that puts Vista’s eye candy to shame

New: GnuCash for Windows
As a late breaking announcement, GnuCash just announced that they have released a beta version that runs on Microsoft Windows for the first time. GnuCash is a double-entry accounting program.

The last time I used them, Quicken and MS Money would let you spend money without accounting for what expense category they went to. The double-entry accounting system taught in accounting classes and used by businesses require you to account for every penny. If you withdraw cash from the bank, it goes from one asset account (checking) to another (cash in wallet). When you spend it from your wallet, you must account for it, for example from asset “cash” to expense “dining”. This has helped me to stop withdrawing cash and have it disappear into the ether.

Please remember, GnuCash is not stable on Windows yet, so be aware if you’re not running it on Linux.

Conclusion
These are just a few of the easier ways to spend less on your computer. There are more ways to spend less, including building your own PC and choosing quality components at a discount. But those are topics beyond the scope of this website.

Thanks, Cliff, for a great article. I’ll whip up something similar for Macintosh users in the near future. (I think both platforms are fine, though I do most of my work on a Mac.) And remember: the number one way to save money on computers is to not climb on the “upgrade treadmill”. Make do with what you have unless you must have some new feature.

This article is about DIY, Frugality, Shopping