The High Cost of Modern Living
First off, buying the new iPhone might have cost you an additional $500 on top of the actual price of the phone, if you were the silly person who paid that much to take Jordan Richardson’s place in line on the day the iPhone 4 debuted, according to an Associated Press story. Richardson then paid someone farther back in line $200 for his/her spot, making a $300 profit — but he’s still out that two hundred bucks because he couldn’t wait! I bet Jordan and his patron — now that it’s six weeks later, and a new iPhone 4 can be bought anywhere — wish they had that money back.
But even if you were so un-hip as to not wait in 11-hour long lines or pay people to move up, you are still paying a lot for that iPhone — or just about any other cell phone, for that matter. And by “you,” I mean “me,” since I have just such a gadget myself. Let’s look at the numbers:
- My monthly bill came to $73. Multiply that by 12, and you get $876 a year. But that’s not all!
- That bill was paid with after-tax money. Assuming I have a combined state and federal tax rate of 30%, I had to earn $1,251 — that’s $876/(1 – 0.30), for those curious about the math — then hand over a chunk to Uncle Sam and Aunt Virginia (my state) to have enough after-tax dollars to pay the cell-phone bill.
I’m certainly not alone in spending that much; plenty people spend even more, and that’s not including the cost of the phone itself. Given that the median household income in America is approximately $50,000 a year, it’s safe to say that there are people who are spending 2% to 3% of their annual income for the privilege of checking their Facebook pages in the movie theater while I’m trying to figure out what the heck is going on during Inception. (OK, a cell phone does more than that. For example, it might also give you brain cancer.)
But wait — there’s more!
Summon your inner grumpy old man
Cell phones are just one of the modern conveniences that we have come to think of as necessities. As Wall Street Journal columnist Jason Zweig wrote in his thought-provoking book, Your Money and Your Brain, “In 1957, the average American earned about $10,000 (adjusted for inflation) and lived without a dishwasher, clothes dryer, television, or air conditioner” — and more people reported being “very happy” than do now. All these conveniences involve monthly fees, up-front purchases, regular repairs, accessories — or all the above.
Besides not having the hardships endured in the past, kids today have all kinds of luxuries that weren’t around 50 years ago. Here’s some of the other Stuff that the past half-century has spawned to consume our money:
- Cable TV
- High-speed Internet
- Netflix
- Tiger Woods
- GPS devices
- Chocolate-covered ants
- The ShamWow!
- Computers, laptops, printers, monitors, keyboards, software, cables, mice, mice pads, speakers, and assorted USB-related doodads
- Mel Gibson
- Houses that are twice the average size of houses in the 1950s
- Satellite radio
- TVs the size of waterbeds (side note: let’s bring back the waterbed!)
- e-Book readers and the books you have to buy for them, instead of getting books free from the library (can someone explain the allure of these things, because I don’t get it)
- TiVo or other digital video recorders
- ATM fees
- Magazines profiting from the inability of Tiger Woods and Mel Gibson to control their anatomical apertures
- iPods or some other MP3 player
- Chocolate-covered scorpions
- Security and medical alert services
- Lobbyists
- Video game consoles and their $50 games
- Handheld video game devices and their $30 games
- The SlapChop!
- iRobot vacuum cleaners
- Summer camps galore (my kids and their friends attend more camps in a summer than I did during my entire childhood)
- Additional freezers and fridges in the garage (that dispense water and ice, to boot!)
- Little blue pills
- Chocolate-covered bacon [J.D.’s note: Darn-tootin’, I’m trying this recipe!]
- Lottery tickets, which can be purchased online or through a recurring “subscription” (“Never miss a drawing! No waiting in line!”)
- Multiple digital cameras and video recorders
- Hats of meat
- TVs and DVD players in cars
- Smoothies, Frappuccinos, Bloomin’ Onions, Chia Pets (tastes sorta like parsley, or chicken)
- Child car seats and booster seats
- Prostitutes who bite your tongue (as hired by the guy who promotes the SlapChop and the ShamWow)!
- Books that explain what the heck was going on during Inception
- Gym memberships
- Children
- Chocolate-covered women
Not all these items are luxuries. Many enhance safety and productivity, and provide just the right combination of sweetness, crunchiness, and antennae-ness. Plus, since average household income has quintupled, we can afford more Stuff.
On the other hand, the list also demonstrates why some people might have trouble saving money. I often receive emails from readers who are in the second half of their working careers and yet have saved very little for retirement. A while back, I read a Washington Post article about a family that was struggling financially, including this description of their life: “The house is small, and the blare of Nickelodeon from the TV chokes the day.” Of course, Nickelodeon can only be accessed by paying for cable TV (a luxury we finally succumbed to last January).
My point, dear reader, is that there is a current and future cost to the modern lifestyle. For every dollar we earn, we could rightfully ask: “Do I want to spend a dollar today and work longer, or do I want to spend a few dollars in the future (assuming some compound gowth), when I no longer have to work?”
For some purchases, we’d undoubtedly still spend the money today. However, others may be providing less current satisfaction than what that money could provide in the future. Just something to think about. I know I’ll keep it in mind when my cell-phone service contract runs out this spring, and I evaluate whether the $1,251 I have to earn every year for it is worth the $102,609 I could have (assuming a 6% annual return and 3% inflation rate of the cost of cell service) 30 years from now.
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There are 118 comments to "The High Cost of Modern Living".
The appeal of an ebook reader to me (I don’t have one yet) is that I can put the huge number of PDFs I have (from academic papers to old D&D adventures) onto a portable device that reads much like a book (ie, NOT the iPhone).
Also, there apparently is development on the library front, although I haven’t investigated it much. http://www.google.com/search?q=ebook+library
Great article! This is exactly the point I’ve been making when people complain that these days you can’t live on a blue-collar income like you could in the 50’s. He did a great job of showing how our toys have become “necessities”.
Yes, many public library systems now offer e-lending. I’ve checked out several already. It works just like paper books, only I don’t have to drive to the library to get them!
Great article! Our “needs” have become more and more expensive. It’s hard to break the cycle.
I always enjoy future value calculations when thinking about expenses that I think are outrageous. The monthly cell phone expense is something that bothers me and to think that some of my friends spend up to $200 a month is simply not logical, to me anyways.
I was thinking about this just the other day. With as far as we have come as an industrialized nation, life seems awfully complicated.
Our gadgets (and I have plenty…I’m a total geek) are supposed to make our lives easier. But perhaps they are making life more difficult?
Wow — those numbers really put things in perspective! I keep reading about how people can’t afford to save for retirement. If you can’t meet that 10% target, why spend 2-3% of your income on a phone?
As I briefly rely on a poor but free wireless signal, waiting for Verizon to send that darn modem, I WISH I had an iphone… or one of those little doohickeys that looks like a USB key that gives your computer internet by magic.
But yeah, the combination of monthly expense and the negatives to the ability to being able to check my email from anywhere have kept me from this technological advance. Someday we may give in. I have never regretted the purchase of the Garmin. but until then, you kids stay off my lawn.
p.s. The Chocolate covered bacon is DELICIOUS. Worth every penny. Of course, we got ours from a specialty place that sells to Whole Foods… Ah, modern life. Make sure the bacon is extra crispy and don’t be shy with adding extra salt. The crisp salty crunch of the bacon contrasts perfectly with the sweet creaminess of the chocolate. And there’s the meat + chocolate flavors aspect. Wunderbar.
On eReaders:
As long as you don’t have a Kindle, you can check out books at the library (Amazon is in the business of selling books, it makes no sense for them to give you this feature). Go to overdrive.com to find out if its avaliable in your area.
To me, the appeal is that I can make the book fit my needs. For example, big text at the gym, regular text for regular reading. Also, its easier to fit in my purse than an actual book. Word lookup is a nice additon too.
Great post! I agree with everything you said. Where have our priorities gone? Instead of family, saving, and simplicity we concentrate on celebrity’s lives, electronics, entertainment, and spending every last cent we earn. And we’re all still unhappy. I’d say it’s time to return to our roots. -Carrie
You know, when people do cell phone analysis it bugs me just a little. There are a few problems with the analysis in this article:
1. The assumption is that your iPhone is not replacing anything. First, what if you *need* a cell phone? You can get one that is cheaper than an iPhone but let us just assume that the INCREMENTAL cost is the cost of the data plan: $30/month. OK, so maybe you don’t *need* a cell. Well, what about that landline in your house? It can cost you $30/month just for a dial tone in some areas. You could break even with a cheap cell. So what is the REAL cost? I would say, for the purpose of this analysis, the $30/mo. from above is more appropriate, not $73/mo.
2. Why are you taking taxes out? Yes, sometimes there is room left in your IRA or 401(k) (or equiv.) account for contributions but assuming that is a bit faulty.
SO, what we really end up at is $360/year (plus apps of course, which you didn’t include) which is a chunk of change for sure, but nowhere near your stratospheric estimates.
Respectfully,
Jake
Jake– the idea is how many additional hours would you need to work in order to get the equivalent amount of money.
I get that you’re saying all of your spending is post-tax unless you can get a preferred savings vehicle. Most people with 401(k)s aren’t contributing the max, and there’s also 529 plans for folks expecting future education expenses and SEPAs for the self-employed… also HSAs… but you’re right that for people with only IRA options they might have to take into account their debt and other savings options (and heck, sales tax if you have choices over which state to buy things from).
It is perfectly natural that we would devote more money to non-essentials as we become a richer people. There is nothing wrong with this. This is as it should be. These non-essentials enhance our lives in important ways. Why shouldn’t we buy stuff we didn’t buy in earlier days now that we are richer?
The problem is that the marketing skill of the people who sell us stuff has increased dramatically in recent decades while the skill of consumers to figure out what spending makes sense and what spending does not make sense is still back at the caveman level of sophistication. We need to throw out saving advice that made sense 50 years ago and that people continue repeating today because it has been repeated so often that people think it must be true and come up with new and better ways to save in an era in which we have more money and more attractive spending options.
The goal should be to spend when spending offers the greatest amount of life enhancement and to save when saving offers the greatest amount of life enhancement. We have more options today than ever before. That should be a plus. We have turned it into a minus by going with one-size-fits-all saving solutions in a world in which the case for spending is always made in more personal, more customized, and therefore more compelling terms.
Rob
The amount of money we spend on our cell phone bill truly pains me. All those taxes and mystery fees really grind my gears. Also – why is high speed internet linked to chocolate ants?
Minor nitpick regarding buying books for an e-reader instead of going to the library: you can borrow e-books from the library. At least, around here you can. Seems kind of weird, but somehow it works. You can “check out” the book online, download it to your e-reader (for free, of course), and it expires after 3 weeks.
I loved this article — which is not to say that I don’t love the data plan on my cell phone just as much. What I take away is mindful spending. I like Dave Ramsey’s phrase of “naming every dollar” and yeah, some of my dollars are named “phone” but none of them are named “cable”. That’s my trade off.
Getting beyond the e-reader tangent, I am not sure American households always spend their hard earned dollars consciously and purposefully. For example, my husband and I dutifully paid our Sprint/Nextel bill for quite a while, it was $135-$175 a month -we switched to a pay as you go phone with basic options and now typically pay between $25-50 a month. Another poignant example, an acquaintance shared that she has a friend who is in very real danger of having her condo foreclosed on -yet she seems powerless to cut non-essentials, and opines that she just has to have a professional manicure and pedicure.
I do not think that spending money is necessarily a bad thing if you are making substantial progress on your savings/investing goals -but there are so many families that struggle and live check to check because they want the appearance of wealth instead of the substance of it.
Yes, it was interesting to see all the cell phone cameras taking pictures of Michelle Obama as she served food at a soup kitchen. Even the homeless have phones!
A quick google for historic census data
www2.census.gov/prod2/popscan/p60-029.pdf
shows that the median household income in 1957, which admittedly is not the same thing as average income but is important in context, was estimated at $5,000 annually. Furthermore, according to inflationdata.com, between Jan 1957 and Jan 2010, inflation has risen 685%. Therefore, median household income in 1957, inflation-adjusted to today’s dollars, was $34,250. That does a much better job of passing the common sense test, don’t you think?
From a more money-philosophy standpoint, it’s important to remember that just because our grandparents didn’t have all of these gadgets today doesn’t necessarily mean that they wouldn’t have wanted them. They’re still people. Of course, in 1957 many families were going crazy to buy their first color TV, which at the time cost about $1,000 NOT INFLATION ADJUSTED, or roughly 20% of their household income. In today’s dollars, that would be like a $50k/yr family spending $10,000 on a television set. This blog would go nuts! Many people here think that someone in 2010 buying a $500 LCD TV is outlandish, imagine a $10,000 one!
So, no, our grandparents didn’t have i-Phones. But the also paid dearly for local telephone service, not to mention long-distance. And they subscribed to newspapers, which many i-Phone users can avoid. And they paid far more for alot of consumer staples than we do today. It’s all about perspective.
Hi,
I’m pretty sure that Mel Gibson and Tiger Woods had control of their anatomical APPENDAGES (a projecting part of a living organism with a distinct appearance and function) when they were visiting APERTURES (opening, hole).
Sincerely,
Lou
Ouch! I’m feeling the conviction from this one. I had only a pre-paid cell phone for almost two years, but then jumped into an iPhone and went from paying about $50 a year to $70 per month. Toss in cable, home phone, water softener, and a car payment…so much wasted on things I don’t really need.
Great list and a good reminder that some things we think are needs are really wants. This reminds me of the book The Progress Paradox – the basic point being that our world has progressed so much in the past couple generations, but no one is happier for it.
@Rob – I’d love to see a guest post explaining your theories that 50 year old saving advice doesn’t work and what alternatives you suggest.
@Coley – the difference of course being that our grandparents saved for the TV and didn’t use credit to buy it (and end up paying 3x what it originally costs thanks to interest).
My house was built in 1941. I still don’t have a dishwasher or a smartphone.
My life is meaningless void of manual dishcare done under a cloud of telecommunicative inferiority.
I often wonder as I watch people from my work sit outside at break time what percent of their income is going off into the air? Some make as little as $9.50/hour, but:
– They have cell phones.
– Some smoke like crazy at $5/pack.
– They pay for tattoos and piercings.
– They sit in their car with the engine running.
– They buy expensive snacks from vending machines.
– They show up in the morning with Dunkin Donuts coffees.
Even estimating conservatively, I’d guess we’re talking about $12/day. Maybe 10%-15% of their incomes. Crazy!
(Of course I’m sending a kid off to a $50,000 college in a few weeks, so who’s crazy?!?)
(BTW, weren’t children around in the 50″s? I’ll bet my parents could have spoken to that one!)
I’m also reasonably sure that the blogs (written on dead trees back then) talked about the high cost of modern living versus the gold old days of 1910, along with helpful tips for cutting spending like looking into using a party line for the phone rather than a dedicated line all for yourself. And getting toys for the kids used, and so on and so forth.
There’s also been a whole heck of a lot of social progress since the 1950’s, too. I’d rather lived in today’s screwed up world than the screwed up world of the 1950’s when everything unseemly was kept quiet.
“whether the $1,251 I have to earn every year for it is worth the $102,609 I could have (assuming a 6% annual return and 3% inflation rate of the cost of cell service) 30 years from now.”
When I crunched these numbers, I came up with $145,954, not $102,609. If it were a small difference, I wouldn’t bring it up, but that’s a pretty big discrepancy (off by 42%). In my calculations, I “invested” $104.25/month ($1,251 divided by 12 months), earning 6% return, and increasing the monthly amount by 3% each December.
At first, I thought maybe it was because I was dollar-cost-averaging in every month, and maybe Robert calculated it as an annual contribution, but that doesn’t fully account for the difference. Annual contributions result in a final total of $138,287.
Maybe Robert ran his calculations using the annual contributions of his after-tax figure of $876? Nope, that results in a final total of $96,834.
Maybe he used the after-tax figure, but with monthly contributions? Eureka! Now we’re getting close: $102,203. Still off by $406, but that’s negligible.
Anyway, it wasn’t clear to me from Robert’s description how he was calculating this figure. I don’t think I was alone in assuming he was using the before-tax figure, since other commenters have attacked him for assuming there was room in our fictional iPhone-user’s tax-sheltered accounts. Evidently, Robert didn’t make that assumption, although a little clarification would have avoided the confusion.
I think the conclusion is that the economy is VERY strong and rebounding if people are buying all this stuff.
Furthermore, I think people have an inherit desire to help out the SF Bay Area economy as good citizens!
Buy more Apple products folks! 🙂
Best, Sam
What about the reduction in costs due to technology and modern life? For example, VOIP telephone service has brought the cost of phone service way down with long distance charges and sometimes even international calls to no additional cost.
I do agree with you though. We were just talking about this the other day. Products are being produced for the purpose of selling additional products. Look at the Swiffer Sweeper. Good, cheap mop/broom that seems like a good buy at the time until you have to buy all the replacement cleaning supplies like the disposable sheets and liquid spray.
By the way, I like e-books for the ability to cary all your books with you in one device. I also like to be able to highlight, take notes and reference back to the books at a later time. E-books provide this feature where books from the library can not be highlighted and must be returned. For a relatively inexpensive price for the books I can have them instantly, on one device with the ability to highlight. Works good for me.
I’m actually getting an iPhone4 very soon. My husband gets it for free since he’s participating in a research project. He gets a Blackberry from work so no need to carry the iPhone, too. Before the iPhone I carried a Palm Treo (an early smart phone) also paid for through this project. But before that, when I paid for it, I carried a Virgin mobile prepay phone. It only made phone calls and only cost me $30 to purchase and $80/year for minutes that I never used up.
Now, don’t get me wrong – I like the services of a smart phone. But mostly I just want a phone that…makes reliable phone calls. I’m not that pleased that I’m switching to the iPhone – its reportedly less reliable for making phone calls. Its strong on apps and other utilities, but I really don’t use that stuff – I just dont’ have time for that.
But I guess we all spend money frivolously on certain things. I sacrifice on certain technologies so I can splurge on other things (like tennis). Others might cut back on cable or something else to splurge on a cell phone. But you are right – having ALL the conveniences of the modern world would make just about anyone go broke.
“@Coley – the difference of course being that our grandparents saved for the TV and didn’t use credit to buy it (and end up paying 3x what it originally costs thanks to interest).”
Kevin M.,
I’m certainly not one to recommend purchasing a TV on credit, but I’d rather credit-spend three times the $500 cost of today’s LCD than make a cash payment of $10,000 for one in 1957.
If I had more time to play on Google, I’d like to do an inflation-adjusted comparison of the cost of telephone service in 1957, plus a reasonable amount of long-distance usage, plus a subscription to the NY Times versus the cost of an i-Phone today. I think it’d be alot closer than people imagine.
That being said, of course, many people pay for i-Phones and wi-fi at home, and still subscribe to newspapers, and so forth.
And no, I don’t even own an i-Phone or any smart phone. I’m connected at work, I’m connected at home. I really don’t want to be any more connected.
I think what affects our tendency to buy “modern” gadgets is the people we hang out with. We could have chosen to live in a neighborhood where “the Joneses” own expensive houses and cars, have the latest cell phones, send their kids to private school, and so forth. I think the pressure on our family (especially the kids) to feel bad for not having what the neighbors have would have been hard to deal with.
Instead, we chose a different neighborhood, where our spending is closer to average. Among our friends, everyone is making tradeoffs of housing vs. hobbies vs. experiences vs. education vs. savings vs. life balance, and is mostly willing to talk about it.
Although my dad made good money, he is a bit of a recovering tightwad and Luddite. We didn’t have color TV in the house until 1980 or so (although we had cable!), and my dad used a push mower and we shoveled snow with shovels until I went to college (1985). I learned from the Master. 🙂
I’m always wary when someone talks about the good life “way back when”. For one thing,as someone who remembers in 57, say, my parents were middle income folks just a few years out of college. They had a dishwasher, a real stove and a black and white tv. They were not rich by any means. But my mom wasnt washing clothes on a washrack. While I agree that the leaps and bounds of technology leave more opportunities for spending, it seems to me they also make more opportunities for saving money. I’ve been to two in theater movies in the past year,only because I thought they needed to be seen on the big screen, thanks to modern tv and netflix. The only postage I’ve spent on the past year is for real thank you notes, as most communication and billpaying can be done online. And mention of the cell phone ignores the fact that for many basic cell phones often replace landlines and long distance service. And I’m just not sure how Tiger Woods is a reason for me to spend my money, really!!!!!!!!!!
I am personally getting ready to ditch my satellite dish. I live in a rural area but now that I have reliable internet, I’m upgrading my internet service – which will cost me an extra $20 per month. But I’m dropping my $90/mo dish bill. A net savings of $70 a month that can go toward letting me out of the cube farm much earlier.
I laughed so hard I almost cried..lol. Mel Gibson and chocolate covered women…licking the road clean…that’s just great stuff and a great article!
Thanks for the laugh and a good financial note this morning, you’ve made my day better =)
From a strictly environmental perspective, the constant drive for upgraded technology does much more harm than good. Yes, we save paper by using email, and cut down on plastic record albums (remember those?) and CD’s by using MP3 players, and save some trees by using e-books. However, computers and all those related devices don’t last long even if you’re not a consummate upgrader. They break easily, crash, wear out and no longer meet speed requirements.
So all those plastic, chemical-laden, petroleum-based devices end up in landfills, while the demand for more increases production of new devices which become future environmental burdens.
There must be a happy medium in which we have these wonderful devices without the need to constantly replace them. As long as consumers are willing to pay big bucks for the latest tweak in upgrades, manufacturers will be happy to provide the goods, at any cost to the earth.
Some libraries have ebook databases containing books and periodicals. As long as your book isn’t full of pretty pictures, ebooks are great (if you forked over the $ for an iPad even picture books are great).
Why do we pay so much money for imperfect technology? Specifically I’m referring to cell phones. Dropped calls, bad connections, crappy batteries, disposable phones. I’m glad my company pays for mine. I would never fork out the money for it.
I have a smartphone, and yes, it does cost a lot of money, but I feel like I get a lot for the money:
1. I don’t have to pay for a landline.
2. I have free GPS navigation with turn-by-turn directions, so I don’t have to buy a separate GPS device and can save time and money by finding the most efficient route.
3. I can listen to both mp3s and my own personal radio station through Pandora, so I don’t have to buy CDs or satellite radio.
4. I can take photos on my 5 megapixel camera, so I don’t have to buy a camera (but I did because I like taking photos nice enough to print and frame).
5. My phone has an alarm, so I don’t need to buy an alarm clock.
6. My phone has GPS and free apps that can track my running (time, distance, pace, elevation) so I don’t need to buy a fancy GPS running watch.
7. I downloaded a free ATM app so I can always find the nearest ATM for my bank and avoid fees.
8. My phone has a mileage app so I can know how many miles per gallon my car gets between fill-ups … and if it’s time to inflate my tires, etc.
9. I downloaded a free “sleep sounds” app so I don’t need to buy one of those sleep sound machines.
10. Because I also access my work email on my phone, my company partially reimburses me at a flat rate which (because I’m on a family plan with a 20% discount through my employer) more than covers my phone’s share of the cell phone bill. My company wouldn’t offer than reimbursement if I had a regular cell phone that did not access email, and they would charge me a small fee per pay period to use one of their smartphones to access my email remotely.
I spend a lot of money on my old 3G iPhone, but I justify it by doing a ton of work with it. I read the news, write blog entries, send business emails, post Craigslist ads, etc. I do have a few games on it, but I don’t really use them much. I am constantly looking for new ways to take advantage of this expensive tool to keep it working for me. I also constantly try to find less expensive ways I could be getting the same work done (I’ve been considering transitioning to an Android with a cheaper plan).
I’m a freelancer who is constantly moving from place to place, so I have come to rely upon my iPhone to do work that I would otherwise be unable to do. Because of this ‘toy’, I get tons of work done on the train, on the street and in coffee shops everywhere while I’m in between job locations and meeting times. I don’t drive, so the subway has become a bit of an office for me. 😉
I’d like to think that, while I’m definitely one of those people who have become addicted to this little tool, I’m using it efficiently and not extravagantly. I would also like to think that there are others like me.
“For every dollar we earn, we could rightfully ask: ‘Do I want to spend a dollar today and work longer, or do I want to spend a few dollars in the future (assuming some compound growth), when I no longer have to work?'”
This is, in its simplest form, the argument behind the wonderful book _Your Money or Your Life_ by Joe Dominguez and Vicki Robin. However, in order to be fully absorbed, it is necessary to follow their process of converting the dollars you spend into “life energy.” Basically, you take your annual salary and immediately deduct 1/3 for taxes. Then, subtract out all expenses that are directly related to your going to work every day (e.g. lunch out, transportation, clothing costs, etc.). This is your real annual income — divide it by 52 to get a weekly figure. Then, you take the number of hours that your job actually takes up during the course of a week (include commuting, shopping for work clothes, etc.). Divide the first number (weekly income) by the second (weekly hours) in order to arrive at your REAL hourly income.
When you evaluate purchases, instead of just focusing on the dollar amount, instead think of it in terms of the number of hours of your life that it will take to pay for it. If your real, adjusted income is $10 per hour, and the latest techno gizmo costs $500, is it really worth 50 hours of your life ($500 / $10 per hour)? Thinking about all of these modern “conveniences” in this context helps to separate the wheat from the chaff — because unlike money, time is a resource that you can never get back once it is gone.
Also — @ Trina — excellent point regarding the ecological unsustainability of our current practices. Furthermore, just imagine how this damage multiplies when every upwardly-mobile Chinese or Indian desires these things that Americans have come to take as their birthright….
Talking specifically about the iphone (or other smartphones) – I for one do not understand the obsession with them; people are always showing the latest one off, but I just don’t get it? If I need the ineternet, it is at home or in the office – the 2 places where I spend the majority of my day. I really don’t need it anyplace else. I can definitely see the need for them for people that are on the road a lot for work. But other than that, what does one really need it for?
I pay a combined $40 for my husband & mine basic (free) cellphones. Even that seems too much to me really.
This was a good read and too appropriate for today… FedEx will be delivering my refurbished 3GS Iphone in the next hour or two.
I thought I’d never want nor be able to justify buying an Iphone, but it’s come down to this… a need for a simpler life. I am hoping that it will replace the following:
-a dying Palm Zire
-a now dead landline (boo, Verizon, boo)
-a cell phone that has been flagging of late
It is a gadget and yes, the plan can cost but for me it could:
-save me carrying multiple items
-organize my contacts & multiple calendars in a way that they are much more accessible
-be my sole phone
-organize my post-it note insanity (trying Evernote)
-lower my texting bill (friends/coworkers texting me made my phone bill go way up– the switch should keep the cost flat)
-keep me in touch with my bandmates who live in other countries and use FB as a point of contact
I’m not writing this to justify an Iphone purchase and I know that’s not the point of the article, but everyone has their version of a modern convenience that really does help them. I look at things that save me time and weigh them against the money that they will cost me. (Example: Cable would be a time and money suck for me, so I do not have it.) I guess it’s all about modern conveniences helping or hindering and right now I’m hopeful that the 3GS will turn out to be very useful.
Lastly, I LOVED the list!!! Many of those things are money, time, intelligence and soul “sucks” (especially Woods and Gibson). 🙂
I agree with a lot on this. But there is a lot more that goes into the calculations. Where there is give there is take. I personally get books from the library, but I do like having books to refer to in my home. I have a small collection, but realize that I don’t reference them very often. I guess if you’re a book hoarder and buy books an ereader could save you money though. How? Sell the books you will never read again. Chances are you could buy the ereader with that money. Then what do you do with all of the space your books took up? Use it for something productive. Or, if you’re single and not attached to the house or apartment move into a smaller space! You might be able to save a few bucks on rent or mortgage if the books move out…
I know it’s extreme and – to many – not realistic to think that you’re going to move out of a home because you got rid of books. I only use that as an extreme example. But I recently was at a friends house who has been reading a book a week – at least – for decades. She has books from floor to ceiling throughout her apartment. I would say at least 1,000 books. She is probably paying for an extra 100 sq. ft. of apartment just because of her books. Where I come from (the northeast) that’s a lot of money (She probably pays $3,500 per month for her apartment – 100 sq. ft. less would probably have her at least $200 per month in rent). I hope she likes the books!
Robert
Why were Child car seats and Children added to the list.
Child car seats are for safety for the kids. I agree to all the other items on the list but not these two. Just wanted to know your point of view why these two were added.
It’s always interesting to hear people list all the apps on their i-Phone and how much conveinence they bring.
Of course, the money that my wife and I save by not having i-Phones is almost enough to completely pay for the services of our semi-monthly housekeeper. I’m not aware of any i-Phone apps that scrub all your toilets, polish the floors, and clean the whole house from top to bottom twice a month, but for about the same amount of money, I think that’s alot of conveinence.
But for many people, when I mention that we employ a housekeeper, they get this high-falutin’ image in their heads, not even realizing they’re texting away almost the same amount of money.
Despite the high cost of living, it is still popular.
I-phones? Haha. TRAC-PHONES.
$97 a year gets me 1000 to 1200 minutes if I buy it right with a bonus code.
That’s < 8.25 a month, not $73.
With intelligent use, I can make 1000 minutes go 11-12 months.
Opportunity cost for Chocolate covered bacon: Well, for starters my husband’s double bypass was over $120,000. Healthy arteries are the ultimate investment!
I added car seats as just an example of something we buy today that wasn’t around decades ago (anyone my age remembers jumping around in the back of a station wagon with no thought of child seats, let alone seat belts). I don’t mean that everything on the list is a waste of money, just that we have more stuff to buy.
And I added children as a joke. The Department of Agriculture (moo!) estimates that it costs $205,000 to $475,000 to raise a kid to age 17 (http://www.cnpp.usda.gov/Publications/CRC/crc2009.pdf). So they’re not cheap. But I don’t consider them luxuries (though they are choices).
Good post, Robert! I’m in agreement with most everything you wrote. Yet, I think you left something out, related to the opportunities we lose when we get hooked by modern conveniences like the iPhone. You inspired me to post about that: http://www.diamondcutlife.org/grabbing-back-our-lost-opportunities/
You all know that I think Robert’s posts are hilarious, right? I look forward to them twice a month. This one had me busting a gut. I loved watching the Monty Python skit (which I’d never seen before) because it reminds me of me and my cousin as we try to compare how poor we were growing up. (Nick: “My dad would drill a hole through a nickel because it was cheaper than buying a washer.”)
Really liked the article! Another thing we lose is quality time with friends and loved ones. I guess you could say sitting down for hours playing video games or surfing the net is quality time if hanging out with friends, but many times we are so consumed by the electronics I would not really classify it as quality time, not to mention the time not spent with family. The cost is also enormous when you really take it all into consideration as your article points out. When I was younger I remember bike tag or kick the can with tons of neighbor hood kids all running around outside. No electronics, guess I am showing my age 😉
How can I possibly take advice from someone who can’t even follow a movie plot? (Inception)
““In 1957, the average American earned about $10,000 (adjusted for inflation) and lived without a dishwasher, clothes dryer, television, or air conditioner” – and more people reported being “very happy” than do now. All these conveniences involve monthly fees, up-front purchases, regular repairs, accessories – or all the above.”
That is true. But all of these costs also buy you more TIME.
-Having a TV for the kids to watch means you can have time to spend with your wife/husband while they are distracted and make car rides seem faster.
-Having a dishwasher means you don’t have to spend time washing dishes
-Having a cell phone means you don’t have to wait around your telephone for a call and can do other things instead. “Honey do I we need milk?” while driving to the supermarket, instead of forgetting and making two trips!
-GPS systems can save tons of time. Just think about all the times you got lost. You can use maps, but GPS is much more efficient.
Its true there are much more options but each offer a form of convenience and time-saving that any person a half-century ago sweating in their hot, non-airconditioned half-sized house, would of gladly opted for.
As for the happiness part, maybe its other social factors at work as well.
@Maggie:
LOL! Your post reads like an iPhone brochure. “Think of all the money you’re wasting on ‘Sleep Sounds’ white noise machines! Well, no more! Buy an iPhone!” LOL!
Come on, you were just making some of that stuff up. “My phone has an alarm, so I don’t need to buy an alarm clock.” Are you serious? You didn’t already have an alarm clock? Your wristwatch doesn’t already have an alarm? Not exactly a big selling point for the iPhone for me.
You don’t have to pay for a landline? Sure, but you don’t need a $600 iPhone with a $100/month voice+data plan to replace a $25/month landline.
The camera point, you already contradicted yourself, noting that all cell phone cameras suck.
I already had a GPS for my car years before the iPhone was invented, and it works just fine. I don’t need GPS for my runs – the treadmill does a fine job of telling me how far I’ve run. Something tells me an iPhone would tell me I’ve gone 0 miles, at an average speed of 0 mph. Not very useful.
My iPod was $100, not $600. And it’s much smaller and lighter than a big, clunky iPhone pulling my shorts down while I’m trying to run.
“I downloaded a free ATM app so I can always find the nearest ATM for my bank and avoid fees.”
What’s an “ATM fee?” I haven’t paid an ATM fee in years. You don’t need an iPhone for that.
Being able to access work email on my phone is NOT a selling point. I don’t want work expecting me to return emails at all hours of the day and night – I want them to know I can’t access work email outside the office (and have no intention of changing that).
All that really matters is you think you’re getting value for your money. But don’t make up stuff like claiming you need an iPhone to tell you when to check the air in your car’s tires. That just sounds ridiculous.
HAHA THIS IS TOO FUNNY!
Once upon a time, cell phones were a luxury. If you desperately needed to make a call from a public place, you could use a pay phone. The people who keep telling us that even the most basic cell phone is a luxury either have a cell phone, or … I don’t know what. Because there are no pay phones anymore. How do you ever make an emergency call if you don’t have a cell phone?
What’s really interesting is those who criticize people who don’t have cars– and therefore use public transportation and/or shank’s mare– for owning cell phones, even if they are pay-by-the-minute ones.
Many of my friends have saved money by simply disconnecting their landline and changing entirely over to a cell phone. In many cases, basic cell phone service (maybe even with texting) can be cheaper than the cell phone plus long distance rates of the 80s and 90s. A few long distance calls could easily run your phone bill up over $73 a month in ’92.
Nowadays, we pay $43 a month for our land line (which is really an internet line) and $43 for our ‘high speed’ Internet service– for us not a luxury, since it’s a condition of my roommate’s job that he have computer access at home. But I know people who might have to pay $300 a month for phone, internet and cable together. Ouch!
These kinds of articles really annoy me, enough that I actually comment. The author is making the typical argument that he’s making good buying choices while those buying the iPhone 4 are fools. Why such iPhone hate? Honestly I thought the same when J.D. announced he bought a Mini Cooper. I thought only a fool would buy that kind of car. But this is completely from my point of view, i.e. I have 4 kids and a wife to haul around. We have to remember that everyone has different needs.
If this was an intellectually honest example then what is the inflation adjusted price of the services replaced by the iPhone (most notably the landline)? Not to mention the 2 minutes of Google search I did on inflation adjusted 1957 incomes (like Coley did too). As others have pointed out, what about the time savings of the things we purchased. If a dishwasher costs 100 hours of my time to buy but saves me 1000 hours over its lifetime, isn’t that a good deal? (I made the numbers up, but this is the kind of analysis I was hoping to see).
And the throw away nonsense about cell phones causing brain cancer? Why perpetuate falsehoods like this and devalue your argument?
Why not just make a clean argument that we should carefully consider the purchases we make since the price is paid in hours of our time? Each person’s utility gained from a purchase is different and it seems more helpful to point out how to make better purchases than to call one a fool and offer no help.
Robert
Thanks for the clarification.
Your article is very good. Definitely worth saving and re-reading it.
The list you have provided here could be useful for many as an ideal checklist for how not to waste your money by spending it on unnecessary junk.
Amen and hallelujah! I too point this out all the time. Maybe I’ll just print out this post & carry it around in my purse to save myself the trouble of talking.
And as for the dishwasher, my grandma had a thought about that… “I have a dishwasher already. His name is Grandpa.”
While it is a good idea to consider your purchases carefully, it is also difficult to be the “odd one” without these conveniences. Once you get used to a cell phone, it’s hard to give up. Same with cable TV. And many others. Not that you are wrong. But it can be hard for some people to be the ones without, and feel left out.
(This is why my grandpa, a retired mechanic, is a millionaire at 90.)
the list cracked me up. 😀
We have also replaced the land line with cell phones. The land line was only marginally cheaper and it was WAAAAY less useful. We are considering smartphones, in part because we are rarely home and it would be nice to have the internet. Also someone stole our GPS.
I would LOVE an e-book reader! If nothing else, for the ability to carry a zillion books with me wherever I go! I read fast, and my library doesn’t carry many paperbacks; if I’m going on a longish trip, my bag will be seriously heavy. If I can get e-books from the LIBRARY… omg heaven. 🙂
I’ll have to save up for that though.
It’s part of lifestyle inflation. Something that didn’t exist for thousands of years (and people lived very easily without) suddenly is a necessity – like cell phones, GPS and meat hats.
I went without my Blackberry for 48 hours last week and the reaction from coworkers and friends astounded me. You’d think I was purposely walking into a crackhouse with a gun pointed to my head. Some even recommended I go get a loaner “just in case”. I mean, really.
My grandparents had 8 kids, so I’m not sure chocolate-covered women is a new invention. 🙂
I can’t believe how many things on that list we actually have or have tried (excluding Tiger Woods or Mel Gibson, hahaha). I think Hats of Meat, satellite radio, ebook readers, the people mentioned, chocolate-covered bugs, the Slap Chop, and little blue pills are the only things we seem to have missed…wow, I am a major consumer…
I’m actually kind of surprised that the majority of these comments completely miss the point of the article, which is the present and future cost of conveniences. So many people are jumping in to defend their choice of gadget, like RB was pointing at them personally. I often feel that defensiveness is the default stance of people who feel they maybe aren’t making the wisest choices.
DH uses a Palm Pre to run his business. No problem. He tried to get me one too. I don’t need it and resisted mightily. Instead he got me a basic phone with a 100% rebate of the purchase price when added to the plan. It makes calls and sends texts, at an incremental cost of $15/mo. But we still have to have a landline in order to get other services from our residential provider. So that $15/mo cell phone is basically just another form of insurance, that we can get in touch when nobody’s at home.
Another example: We pay about $100 for DISH network and high-speed internet. Those are conveniences, not needs. They’ve meant our movie and theatre attendance has plummeted, but did we spend $1200/yr before on movies and shows? No, we certainly did not. We’re paying *extra* for that convenience, and we’ve also substituted TV for more distinctive and special experiences. Probably not a net advantage.
No matter how much you love your gadgets, and regardless of whether your 1950s equivalent would have loved them too, spending money on these things today does mean we can’t save that money for the future. And even the present value of our conveniences may not exceed the value of what they’ve replaced.
I didn’t get the article. It didn’t have a clear thesis to me. I also didn’t find it funny. I found the analysis quite logically inconsistent – but then I don’t have an American sense of humor and I take everything literally.
I don’t understand why PF blogs focus on glorifying the olden days. It seems like this theme is getting constantly re-hashed. This article does not offer a unique value perspective on my time.
I also, just for fun, made a huge list of things that the American family bought as part of their consumption bundle in the 50’s that we no longer buy.
I disagree that cell phones are part of lifestyle inflation. The very first ones were, yes. But now that is how people communicate. Before telephones and cars existed, society was different, our infrastructure was different. People lived closer together, and if you wanted to communicate with someone, you just walked or rode over and said hello. You can’t do that anymore. Do you think I’d be welcome if I just showed up at a friend’s house any old night just to say Hi? Maybe once, but that’s not how society is built now. Maybe all your friends live in the same cul-de-sac and so you can get all your socializing in person, but my friends and family are geographically scattered and we rely on texts and facebook to keep in touch. Its a different social infrastructure.
I have one friend who refused to get a cell because he said if anyone was *really* his friend, they would know where to find him at home or at work. Well that’s all well and good, but I live three hours from him so I can’t just stop by. We don’t see him very often, which is a shame.
If it were lifestyle inflation then the poor wouldn’t have them. But as you’ve pointed out they do because it is a need now and not a want. To the people who say it is not a need: are you saying you have no phone service at all? Because my cell is cheaper than any landline in my area.
It’s a question of time and effort versus money. It takes me a lot longer and a lot more sweat to haul my laundry to the laundromat every week, but my apt. rent is a lot cheaper since there’s no laundry in my building. Neither is there a dishwasher, an elevator or central AC. So I save a lot of $ on rent, electricity, etc. In return, it takes me a lot longer to do things like wash dishes, do laundry and I “suffer” more by having to drag everything up 4 flights of stairs.
I am apparently the other person in the readership who actually remembers 1957. Of course my parents were pretty happy back then. They both grew up during the depression. Both had lost a parent before they were ten years old. My dad’s father only worked intermittently.
My parents were indeed pretty happy then. My father had a steady paycheck and he was no longer in danger of somebody shooting him during the war. My mother could stay home and raise us. I didn’t even know anybody who had a working mother. Why wouldn’t they be pretty happy? Yeah, we had a TV but half the time it didn’t work anyway. I never even saw a color TV until 1967 much less know anyone buying one.
Just to give you a little context.
Cell phones are an example of everyone else having one leading to there being less infrastructure for people who don’t – there’s not so many pay phones around, and the assumption seems to be that everyone has a phone.
We got cell phones after the car broke down on the interstate in Oklahoma, when my son was still an infant. Nobody stopped to see if we were OK, nobody stopped to let us use their phone, we pushed the stupid car to the next exit and…nobody at the gas station knew where there might be a mechanic who fixed Toyotas, or a mechanic at all, or a pay phone.
When nearly the exact same thing happened to my mom back in the mid-80s, someone stopped and gave us a ride to the next exit, where the gas station had a pay phone and the clerk had a stack of nearby-area phone books we could look at.
I remember 1959. We didn’t have a dishwasher, TV, cell phone, or air conditioning, and I still don’t. I also have the same stove we had back then. This is one of the reasons I am one of the “millionaires next door.” I actually do live a pretty luxurious lifestyle, but I spend money on travel, not on household goods. It’s all about putting your money where it means the most to you, not just spending it automatically.
The appeal of an e-reader for me is that I can borrow books from the library without worrying about fines because I can’t seem to get them back on time. I’ve got about 100 books on my e-reader, and most of them are free from Project Gutenberg. For me, it’s much cheaper in the long run than even the library, because, well, I’m forgetful! It takes the forgetful fees out of the equation.
The point of the article is valid. We spend a lot on fancy gadgets. But I have to nitpick this bit: “In 1957, the average American earned about $10,000 (adjusted for inflation) and lived without a dishwasher, clothes dryer, television, or air conditioner”
The average American home certainly had a TV in 1957.
http://www.tvhistory.tv/facts-stats.htm
78% of American households had a television in 1957. And like Coley pointed out a TV cost a LOT more then as a % of your income.
Also note that in the 1950’s we spent ~27% of our household income on food. 10% on apparel. 3% on booze and tobacco. Those 4 categories accounted for 40% of household income. Today we spend about 18% of our income on those things.
I’m really getting tired of statements like the following:
“whether the $1,251 I have to earn every year for it is worth the $102,609 I could have (assuming a 6% annual return and 3% inflation rate of the cost of cell service) 30 years from now.”
Statements like this are misleading to the point of ridiculousness. It sounds like you can turn $1,000 into $100,000 with nothing but a little bit of time.
How about wording it how it really is? You’re spending 30 years to turn approximately $37,000 into about $71,000 (since you’re investing pre-tax money, you’re going to have to pay taxes on your $102,000), all adjusted for inflation. You’re getting a return of about double, not nearly a 100x return on investment like the original statement implies.
Besides, the only reason that you can make 6% per year on your investments is because we depend on a constantly growing economy, so that your share of it (held in stocks) continually increases in value year after year. We do this by offering more and more goods and services for sale, and convincing people to buy them. If we stopped growing the economy, and just had everyone make due with what they have now, the rate of growth of the stock market would drop from six or eight percent a year to essentially zero. Your $1251 per year to invest would just be $1251 unless you could find some way to grow it, presumably by building something and selling it to someone (who obviously doesn’t actually need to buy it, by the logic of the article).
Missy (70),
If you’re a millionaire, next-door or otherwise, then even at a modest 3% your investments are spinning off $30k per year. Surely you can afford a $250 dishwasher, a $300 small LCD TV w/ digital antenna, a $200 window A/C unit, and maybe $15 per month for a basic pre-paid cell phone.
Frugality and wealth are nice, and one certainly does not need any of these things, but nobody gets any awards for being a martyr either.
Yeah, I’m de-teching a lot. I have a desktop computer with DSL internet service. It costs $17.99 per month. My (rotary!) landline phone is measured service and it costs no more than $5.00 per month. I don’t have cable (but I did have to buy one of those digital converter boxes for my old tv — $25 with the government coupon). I have a smartphone, but when the contract expires in November, I’m switching to a phone-only. I got rid of Netflix, and take out movies from the library if I want to watch one.
I find myself MUCH happier without all those gizmos. I’m unsubscribing from lots of email lists, and while I do while away time reading sites like this one on the INternet, I also hang out, read magazines, play with my pets, garden — trying to un-digitize my little life.
Coley (74) – you’re missing the point. If she was happy without these things then, why not now?
All of those things also have continuing costs of maintenance, utilities, space, repair, and replacement. Not to mention the environmental and time costs.
@Coley #74
But the whole point is that going without that stuff DOESN’T make you a martyr.
I lived without any of this stuff until 2004 and life was lovely.
The comments about cell phones now being a necessity b/c of lack of infrastructure are true though. It’s very difficult to find a working phone around here, and each call costs 50 cents. Barely 15 years ago a payphone call cost 10 cents (in Connecticut) and payphones were everywhere. Sigh. What do superheroes do now?
@Erica #75
I guess you win. Do you want a cookie? You’re better than the rest of us “consumers” out here in the Western world.
I love you Robert. 🙂 I look forward to your posts.
I love my iPhone 4 too though (not enough to wait in line though). But I recently moved 3,000 miles away from my family & friends so it makes it doable to keep in touch with family & friends through Facebook & multimedia messages. And it’s just fun.
Yeah, I have a cell phone. An iPhone in fact (a 3GS, not a 4G). However, my cell phone IS my phone; I don’t have a landline. While having an iPhone or other smartphone is certainly an indulgence, simply having a cell phone isn’t. A cell phone instead of a landline means my friends can reach me even if I’m not at home. Having BOTH is an unneeded expense.
The house that I’m renting didn’t come with a drier, and wasn’t supposed to have a washer for that matter, but the previous tenant left hers. I bought a drying rack because I didn’t feel like schlepping a drier down the basement steps. If I had a drier I’d use it, but the drying rack works well enough.
I don’t have a television. I don’t have cable TV. I do have high-speed internet, which I can use to watch TV shows (though I rarely do).
I also don’t have a dishwasher (and wouldn’t want one—my kitchen is too small as it is) or air conditioning.
I have both a landline and cell phone. My landline is my business phone so that’s a necessity for me. I thought about just having a cell phone, but it doesn’t seem practical to have my personal cell phone number on my website for customers to have access to. Plus, given that I work from home, I spend a tremendous amount of hours on the phone mostly for business related reasons. For that, and a few other reasons, its actually cheaper and more practical for me to have both for the time being.
I wish I could see fewer posts (and comments) on this blog that seem to glorify the people who pat themselves on the back for living as close to their cavemen roots as possible.
@77 (questioner) ROFL. That is an excellent question. And what about Dr. Who? How can he travel unnoticed post 2000?
LOL, I have a cell phone, but it is turned off and in my purse so that it can be used IN CASE OF EMERGENCY. I have a landline at home that works just fine and is still working when the power fails and the battery on the cell phone dies.
I have noticed generally that these phones lead to them being glued to the persons hand so that all they do is interface with the phone and not real people.
Here’s something that you can try to pay for the data plan, which is a real help, particularly when travelling. I initially wanted to get a refurbed iphone 3G when I signed up for a new ATT contract (using the premier discounts), that gives about 15% off depending on your company, but instead ordered an Iphone4.
Sold the iphone4 on Ebay for about $700+, (after fees, and my inital cost for the iphone) net about $380, that pays for about 18 months of the discounted $25 data plan. Use the new plan with my 3 yr old iphone 2G (bought nused, unlocked to Tmobile with no data plan), with no added guilt about splurging for an unneeded luxury. You’ve got to hand it to the early adopters, they really do subsidize these gizmos for the rest of us 🙂
Great article- fun- interesting responses.
I think cell phones are seriously overrated- but every one of my 6th graders (in a poor neighborhood) carries one since mom works and that is the only “phone in the house”. If I need to call their parent- I use their cell phone! (I own a TRAC and it does not work at school.)
I grew up with a mother at home. These kids grow up with their mother in their pocket. Sometimes I wonder which of us communicate better?
As for a tv in 1957- not in my upper middle class house. The first one was in 1960.It was such a big day we are all in front of it for the picture in my scrapbook.
I seriously laughed until I almost cried between the post and the linked Monty Python sketch.
To cheapcookies (45) I say: RIGHT ON. My husband and I both have prepaid T-Mobile phones that cost us roughly $200 per year. Total, for two phones. Smartphones depress me a little bit, as they usually just seem to interrupt real human interaction while people check their tweets or whatever.
@NoViTP (#82)
And I wish I could see fewer comments complaining about frugality. This is a blog about personal finance. Frugality is an important part of personal finance. So is learning to control consumer wants.
This post is fine — funny and insightful. It’s not advocating that we live as cavemen. And it’s not patting anyone on the back. Few comments or posts are like that. Instead, it’s a call to spend consciously.
I know I shouldn’t respond when I feel provoked, but sometimes I can’t help it. I see so many complaints about how frugality posts aren’t helpful or entrepreneurship posts aren’t helpful or investing posts aren’t helpful. Come on, people! No blog can be all things to all people at all times.
Take what you want and leave the rest behind. If you don’t like the frugality stuff, then ignore it.
For the average person I think it’s insane that they spend $70/mo+ on a cell phone.
Seriously…it’s a phone…it calls people…and yeah has apps that are very handy (maps + geolocation + local search, for example).
But for $70/mo? I dunno. I’m pretty happy with my $19.50/mo plan that gives me all the talk time I need.
Instead, it’s a call to spend consciously.
To me, too, that what it’s all about.
ETA: I actually thought this post was hysterical, because it put things like child car seats and the ShamWow at the same level. LOL.
This post hit home with me. I’ve found that the family members of mine who tend to complain the most about the “haves” versus the “have nots” are those that are the first in line for the new Mac products, iPhones, etc. To me, they “have” all the great technological toys at the expense of having any real savings.
I gotta try that chocolate covered bacon recipe… and with any luck, the chocolate covered women one too.
Sounds like a lot of IPhone users are trying to justify their need to have something they really don’t need. My phone is three years old. I can do an upgrade, but I refuse to pay more. I use it to make and receive phone calls. I am way too busy to play with my phone. People who have these kinds of phones tend to disengage from what is going on around them. Sit in any meeting where people are supposed to be paying attention, and you will see at least half the people fiddling around with their phones, and some of them actually answering phone calls. (There, I got that off my chest!) That being said, I’m so tired of trying to keep up with every new electronic device that comes out. Many of these new things have improved the quality of our lives, but you’d be hard pressed to convince me that cell phones have done that.
I think this post is a good reminder to be conscious of your buying choices, and watch out for lifestyle inflation. i’m in my 20s and almost all my friends have “smart phones” but i don’t care. i’ve been with the same service provider for over 5 years now, and every 2 years or so, i’m eligible for a free phone, and that’s when i get one. It doesn’t have any fancy apps, and sometimes my friends tease me, but it does the job for me.
Just wanted to mention that, because I noticed some comments saying how they feel peer pressure to keep up. Come on people, we’re not in high school anymore. Say no to the peer pressure.
BTW I don’t live like a caveman. I do get netflix, and other stuff I care to get.
I NEED my smartphone since I trade forex.
As for cable, I only have the lowest basic tier, since I have to have it in order to get internet (Comcast), but I hardly watch tv. I miss watching Discover channel and TLC, though. I just don’t really like watching “tv” on my computer screen, since it’s not in my living room.
#92- if you don’t like trying to keep up with the latest device- don’t. Nobody says you have to. Your ‘sounds like..’ is your own bias speaking, not necessarily the truth.
I personally get annoyed at the holier-than-thous who assume because someone owns an iPhone or BlackBerry or smartphone, that they’re automatically either a trendoid or wasteful, money-wise. Perhaps people out there with desk jobs or who are retired or work from home don’t need one, but for me its been a godsend! I travel constantly for my work and would rather not lug around a laptop-yet I constantly have to check for last-minute work that comes to me via email (cause if I don’t I lose the work). My iPhone paid for itself within a week that way. It has saved my backside from getting hopelessly lost with the GPS; I can keep in touch with my husband who also has a constant travel, non-desk job by texting (because driving while talking on a cell is illegal here). I can do banking day or night, I can manage my budget while on the train. I use it as an alarm clock as well since my alarm clock died. Its incredibly, incredibly useful to me. I used to have a regular cell but it just couldn’t do what I needed it to. ( I don’t need or have a landline. I’ve only got cable because my mother-in-law who lives with us wants it. These things don’t matter to me.) Please stop painting everyone with the same brush. You have no idea what other people’s lives are or why they buy/use the devices they do.
I love the numbers about how much you had to earn to pay this $876 bill. Should be even further motivation to stay away from such expensive toys!
And for #95–if you’re making money with your Iphone–then more power to you!!
It all depends what you think is worth it. I don’t think that modern life has to be expensive or busy, we can choose the conveniences that we want or don’t want. We all choose what we want to do with our money, time and life. 😀
My bf and I both grew up in nice middle class families with cable, we’re 27 and 30 years old, and we don’t have cable, no tivo, and its so freeing!
In the 21st century we are advertised to death, its ridiculous. When I was a teen I was glued to my tv, because there was always another tv show to watch, its nice to not have that anymore. It also helps to not have the constant commercials.
We do have internet access and computers, so we do pick and choose what we will give our time,attention, and money to. We both find the internet much more useful than cable.
But yes I agree with the end of the article that there is a cost to what we spend our money on. I hate the word frugal but even I have to admit, you have to be economic or you won’t end up with money towards the end of your life when you are old and really need it.
Also, the word you want is not “apertures”, but, I think, “appurtenances”.
This article definitely make you think but it’s a “it was always better in the past without our modern lifestyle” rant I’ve been seeing lately.
Technology is evil. Modern conveniences are evil! We spend too much! The past was the greatest.
Well, sorry to put it to you, the past wasn’t that great esp. in the 50’s.
The 50’s:
You can get drafted.
If you’re weren’t White and privileged then you were blatantly discriminated against.
Cigarettes were “good for you”.
Medical tech was horrible considered to today.
QoL at the end of life was worse (why do you think there was Soc. Security on 56 years of age? Not many people were expected to live that long).
Life expectancy was worse. Polio. Smallpox. Malaria. Whooping Cough, etc.
Food was more expensive.
FDA was in it’s infancy. Quality could be poor.
If you didn’t conform with being WASP you were ostracized and it was a lot less permissive then today.
The Cold War – Nuclear scare-tactics. McCarthyism.
You couldn’t contact your family easily if you were far away.
Friends either.
You’re entertainment options were extremely limited to the “mass market”.
You couldn’t get “info at your fingertips” for anything. Every news item was days old on dead trees unless you had that “new fangled television” or radio.
Travel options were extremely limited and expensive. The “jet set” means that you had to be almost rich, save forever for a ticket (or in the military) to be able to fly.
etc, etc..
You have to take the bad with the good. You could somewhat circumvent all of these “evil modern distractions”. I would much rather have the medical breakthroughs, QoL, life expectancy with some distractions then the potential strife, disconnection and discrimination (if you weren’t White) from the past .
I wouldn’t want to go back in time even if you put a gun to my head.
With the advent of iPhone and Android, my carrier decided to change my data plan from $8 a month to about $27. Why? Because I had an unusual phone (Motorola A1200) and they decided it was a “smart phone” and required the higher data plan. I canceled my data plan until I decided upon a true smart phone.
I use to check and send e-mail, read the news and technical articles, and do search based research on my phone. I can’t do any of that anymore, but a strange thing happened. The world didn’t end. No one complained that they could not reach me or that I didn’t respond fast enough. I now have a lot more time – I no longer fill up my free time with my eyes and fingers glued to my phone.
I still want a smart phone (yes, I’m a geek) but I’m no longer in a hurry to get one. Every day I can use my now “dumb” phone I save money and – amazingly – have more time.
Isn’t the point of frugality to spend less on something you dislike and more on something you enjoy?
So what if someone likes their iPhone?
Personally I enjoy hiking so I spend much more on a knife or boots than I would on a phone. Oh well.
J.D. –
Thanks for this article. But please consider taking out that throwaway comment about cell phones causing brain cancer. It simply isn’t true and by leaving it here you are giving this myth undeserved legitimacy.
man, looks like i was about 2 days ahead of this article. i just cancelled my blackberry and data plan.
my wife and i had a two-line plan with verizon and i had a data plan for my BB. i killed my phone and will use my work phone for rare personal calls, and we bumped up my wife’s minutes to cover my weekend chats with mom.
in total we will save over $900 per year (that is if i don’t get busted by my boss), and i get so sell my BB on eBay. i had to pay $125 to kill one of the two lines we had with our plan.
after the video post earlier this week about investing for your kids to have some money to start out, i decided to look into paring back (yet again), and found that i could initially fully fund my kids’ accounts just by killing my cell phone and data plan.
between cable, internet, the cell phones, we were paying about 6% of our take home for data/media content.
Get list! Notice how many are also needlessly consuming energy. You can save lots of money if you limit the number of such devices, not to mention any subscription which might go with them. I am starting to think victorian for replacing a lot of these useless things. Yes they had radio. You could do radio, but radio is not what it used to be. In this case, an mp3 player would still be very useful.
@ExpatEngineer:
“please consider taking out that throwaway comment about cell phones causing brain cancer. It simply isn’t true and by leaving it here you are giving this myth undeserved legitimacy.”
Funny. People said the exact same thing about cigarettes in the 50’s. Huh.
Lots of interesting comments.
I see some items are cherry picked, but what about others?
What about a car and having to buy gas for it. Or having to buy electricity instead of using candles.
Couldn’t these things back in the day be considered “high cost of modern living”?
The high cost of living is just the progression of an increased standard of living. While some mentioned are maybe lifestyle inflation, most of these items are not and are becoming standardized in our society (ie cell phones).
Just so I’m clear…the amounts listed are for 1 Smartphone in a family. If there are 4-5 in a family, are the costs 4-5x the above numbers? I imagine there are family plans, but any word on how much the cost per year for families with several iphones?
My husband has a Blackberry that his work pays for, as he travels a lot for his job. I just spent $300 for a year’s worth of minutes on our daughter’s and miy prepay cell phone. They are required to pay for any additional minutes after the paid for ones are used. They text when they need to.
Also, funny story…my husband was at a large airshow in Wisconsin last week, with about 350,000 attendees. He said he looked into the crowds at one point, and about 90% of the people were looking at their little screens, instead of some very impressive “being there” experiences. It’s also really interesteing to me how many do not look up when they are walking, biking, or driving, as whatever is on their little carry around screen is more interesting than what is happening around them, and the people they are with. Or their own safety, for that matter.
I agree with Coley in that it’s a matter of perspective and am cynical of the calculations made in the article regarding salary in 1957. I think my grandma told me they bought their first house in the late 40s for $20,000. My parents were married in 1976 and bought their first house for $40,000.
As wealth increases, it seems that the certain lifestyles become expensive as more and more people have access. In the 50s, fewer people went to college, but it was more affordable and likely that young people would pay for their own education. Now, a great number of students get loans or have had parents save for them, and the price of education has risen drastically. These are “necessities” that are also very expensive.
It does cost money to even aspire to a certain lifestyle in many cases.
102)ExpatEngineer
What evidence do you have that backs your theory?
It would be nice to shrug off cell phones causing brain cancer, etc. as a myth, but from what I’ve read there is no conclusive evidence either way. Part of the problem seems to be that alongwith independent studies, phone companies also fund many studies. According to some of the articles I have read and listed below, the studies done by the phone companies (who have a vested interest) show no danger while the independent studies show differently. In a really good piece on This American Life, one author quoted neuroscientist Leif Salford saying, “This is really the largest human biological experiment ever, because we don’t know what the long-term effects are going to be.” This rings true to me only because cell phones have not been around long enough for us to really see their effects.
http://www.pri.org/health/are-cell-phones-frying-our-brains2039.html
http://www.thisamericanlife.org/radio-archives/episode/406/true-urban-legends
I very much enjoyed the style and humor of this post.
However, Elizabeth Warren and her daughter Amelia Warren Tyagi debunked the the “everyone is squandering their money on luxuries” theory when researching their book “The Two-Income Trap”.
The book outlines the rise of the two-income family and highlights the consequences when one parent loses a job.
It is an excellent read with stellar research to back up their assertions. There are many illuminating cost-of-living adjusted for inflation calculations cited.
Re: video games
More like $100 after you calculate the price of all the downloadable content.
On rare occasions I will pre-order the special edition of a game, but most of the time I will just wait until the price of the game to drop.
It doesn’t usually take the price that long to drop down to $30. I usually wait until it is $20 which takes a little longer. With PC games, you can usually get all the DLC included for that $20 if you wait long enough.
And really, you only have to wait once, since once you do, there will always be ‘old’ games that have dropped in price that you can purchase while you wait for the next one.
Funnnnny!!!!!!!!!! And absolutely true~!
Great post– the numbers at the beginning actually made me go to my phone plan, calculate how much I was paying for unlimited texting v. how much I actually text, and change my plan accordingly. I reduced my bill by $15/month pre-tax. And I’m about to look into decreasing the Netflix account too. It’s amazing how much we (that is, I) can waste without really thinking about it.
Thanks for this blog– it’s helped me start my “debt snowball” rolling, and I hope to have good news to report soon! 😉
Houses and vehicles are the biggest discretionary expenses.
Not iPhones or cable or high-speed internet.
People spend much more on the above than in the 1950s.
Who wants to live in a 1957 3 bedroom, 1 bath, 1000 sqft. Levittown house anymore?
Or share one used car per household when they can finance one new car per driver?
I loved the article-I am so sick of people pressuring me to buy an iPhone, esp as I have a blackberry from work and no cel reception at home. So I still have a landline. And these devices are not always the ideal solution. I organize a lot of high level meetings, often with speakers who go over time. At the last one I didnt have my blackberry and had to zok my VP on the arm to get the time off HIS cel phone. It was unspeakably indiscreet and vulgar. I bought a good quality wristwatch that weekend and have worn it every day since-so I cant forget it. I can check the time MUCH more discreetly that way. AND NO MONTHLY CONTRACT! Who needs a Scrabble app anyway? I am much too busy. As a victim of both burglary and mugging I DONT WANT my entire life on one machine. It is too risky. I try to be mindful when I spend money, but it can be challenging.
Thinking things over never hurt. If you don’t have much money, you should think about what to invest in. A fast internet connection is MUCH better than a slow one: you can actually get more things done, and the internet can be a rich source of cheap entertainment. Playing an online game is relatively cheap. Finally the whole family is enjoying it.
TiVo or satellite radio: over here in Europe we don’t have it, and I certainly don’t miss it! Smartphones: benefit is grossly exaggerated. You really DON’T need to be in touch any time. If they need you, they’ll call or text you.
This is probably to late for anyone to notice but it seems the iPod Touch has been overlooked. I was at the check out with the original iPhone when I found out you couldn’t use any of the features without the ATT data package. ATT has crap for coverage just about anywhere I go so this wasn’t even an option. A few months later I got the iPod Touch and have been loving it for the last 3 years (wow) I get all the functionality that I need and wi-fi accessibility. To top it off they cost less and there is not monthly upkeep. I use it for games and e-mail while traveling and books (so no kindle needed) and surprisingly enough it’s pretty handy having a dictionary to settle arguments. It’s also been great for my art career. My entire portfolio is a touch away and I can show interested parties anything of mine on the go, no waiting to get back to them.
After living without a TV for the past 5 years and not having internet at home for most of college I’m totally confident in my ability to get out of the house and find what I need, not pay for things to keep me in.
I totally agree! This came up in a conversation at work about the “cost of living” and how many people think it includes things like iphones and cable tv.