Some of the answers to that one are obvious:
- The best cities in America are bloody expensive to live in.
- We eat out all the time, which costs about four times as much as cooking your own.
- Pay does not keep up with inflation.
- The cost of a car has gone through the roof.
- Insurance–especially health insurance, but other varieties, too–has become obscenely expensive.
- Owning a pet became an expensive obsession as pet food manufacturers, veterinarians, trainers, and a host of others in the “pet industry” realized that pet lovers are the biggest cash cow ever to come their way.
- Entertainment is through the roof: to go to a baseball game, you need to take out a bank loan.
You no doubt can come up with others. But I’d suggest something more subtle is going on. To wit:
We are being nickeled and dimed toward penury with the repeating costs of subscriptions, gadgets, doodads, and hoodoos. Half of Americans live beyond their means, and many don’t even know it. The most effective and possibly the most profitable way to extract money from consumers is to lock them into a monthly payment. And so much the better if you can persuade them to auto-pay those charges on a credit card.
Resisting this trend is well-nigh impossible, because so much of what undergirds a 21st-century lifestyle is paid for on a monthly basis.
- You pretty much need a wireless connection to live in our current culture. I pay $90 a month for the privilege of using the Internet.
- You need a phone. Still resisting the $50-$150/month cost of a smartphone, I pay a measly $30 ($15 plus that much again in alleged taxes and fees) a month for a land line. But that can’t continue much longer…sooner or later I’m going to be forced to give up and buy into a smartphone plan.
- You need health insurance. God only knows what that costs younger people. I pay about $230 a month, give or take, for Medicare, Medigap, and Part D.
- You need transportation. That’ll be $380 a month for a late-model second-hand car.
- You need car insurance. You need homeowner’s insurance. If you’re not crazy, you have umbrella insurance. If you are crazy, you have health insurance for your dog or cat.
- And then you have the various monthly dings: electric, gas, water, sewer, trash pickup, and on and on.
- And the annual gouges: property taxes, state income taxes, federal income taxes, and in some parts of the country even city income taxes.
Have you noticed that of late the pressure to sign up for repeating charges has escalated? For example, if you get your news on the Net, as I do, about a third of your sources are now stashing content behind paywalls. A few, like the Washington Post, will let you read an article if you linked to it from Google, but you get only ONE article. Wanna read something else, you have to pay for it. Others will let you read a limited number of articles per month — three, say, or maybe even ten — and then demand that you sign up for a paid subscription.
For the Post, that’s $195 a year — $16.25 a month, or $4 a month if you’re an Amazon Prime customer. But to get that bargain rate, you have to pay Amazon another $100 a year for its “Prime” come-on. For the Times, it’s $1.88 a week (bare minimum), or $7.52 a month or $97.76 a year.
When people demand my cell phone number these days, I now just frankly say outright, “Sorry, but I can’t afford a cell phone.” That’s more polite, I suppose, than announcing “I wouldn’t give out a cell phone number on a bet,” but it still takes people aback.
Fifty or a hundred bucks a month sounds like small change. But think about it: if your monthly income is pretty much fully dedicated to buying gasoline, a car, lodging, food, clothing, utilities, insurance, and other necessaries, you don’t have a lot of wiggle room. Small change adds up…
Let’s suppose, for example, that I decide to pay for the Washington Post and the New York Times, both of which are publications of record and pretty much indispensable for anyone who wants to keep up with non-fake news. I keep the New York Review of Books and The Economist, both of which keep me amused and informed in the absence of cable television, movie-going, and very much restaurant-going. I add Forbes — in reality, I would write that off through the business because it would provide a lot of fodder for the profit-making blogsite that you’re reading as we scribble. But for the sake of argument, let’s imagine I run it through my personal books instead. And let us assume I decide to join the herd and sign up for a smartphone. And let’s also imagine I get suckered into buying pet insurance — not a realistic assumption about yours truly, but one that applies to a large number of otherwise sensible pet owners.
None of these costs, at first glance, appears to be very much. However:
Obviously, to stay within my budget I cannot have all these things. To have item a, I have to give up item b. So, I can’t read say, both the NYRofB and the Washington Post. I can’t have Amazon Prime and Costco. I can’t have Netflix and Amazon Prime.
As a practical matter, I don’t have Netflix…but I’d like to re-up to Netflix because its choices are better. To get Netflix, I’ll have to drop Amazon Prime, which will mean a lot less shopping on Amazon, because it’s cheaper for me to buy stuff locally than to pay the same or more on Amazon and cover shipping.
These little monthly dings look so piddling that many people don’t realize the little stuff is the reason they can’t stay on budget.
So…what would you give up to get a Smartphone?