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15 Little Life Hacks

Why things get cheaper but you spend more

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Ever wonder why things are getting cheaper but you never seem to have more money?

The New York Times reports that the FCC “is preparing to impose significant new regulations to open the cable television market to independent programmers and rival video services after determining that cable companies have become too dominant in the industry, senior commission officials said…Officials say the finding could lead to more diverse programs; consumer groups say it could also lead to lower rates.”

Here’s what I predict will happen: Cable rates will fall and new options will become available — meaning we’ll actually pay more on total services. This is a similar pattern for food, Internet, cellphone services, clothes, and pretty much anything you can think of. While things are getting cheaper and quality is going up, there’s just more stuff to buy. I wrote about this earlier in Guess How Much Your Subscriptions Cost?

Think about it when planning.

Btw, the best three books on this topic are:

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  1. Food is most assuredly not getting cheaper. I pay over 30% more now for milk than I did just two years ago. Breakfast cereal and ice cream too have gone up in price, although more sneakily as package sizes have shrunk slightly. Energy – fuel, heating — has gone up in price a lot too. And home rents have been going up as well, since rental demand has increased due to houses in housing boom areas getting priced out of reach of most people. Put together big price hikes in food, energy, and rent and I am not surprised that people don’t seem to have more money for discretionary spending.

  2. What I’d like to see is the ability to order only the stations I want. By opening this market up it will be possible to create new demand for products that currently do not exist. I currently have no cable subscriptions because I don’t want to pay to be subjected to a bunch of garbage. So in that sense you are right, if cable offered a la carte channel subscription and more options for programming were available I would potentially spend more because I would add an additional subscription (cable) to my list.

    That being said, I do not agree that most things are getting cheaper- food and energy costs are totally rising! Also, import (ie almost everything we buy that is a good, and not a service) costs are only going up.

  3. That’d be awesome…pay for cable by the channel, or time watched…well, that’s what the internet is for, anyway.

  4. Hot tip, Ramit – that Amazon widget shows up really badly in at least two feed readers, including Google Reader.

  5. Food isn’t getting cheaper compared to a couple years ago, but it is definitely cheaper than it was say, 20 years ago.

  6. Food isn’t cheap, at least the name brand stuff I eat. I love going to casual fast food places much better then Burger king. I like Red Robin, Penera Bread, among others.

  7. Says thanks to farm subsidies and ethanol for higher food prices. Someone asked Buffett and Charlie Munger about alternative energies, specifically ethanol, and Munger said it best. He basically said what sense does it make to take a basic safety net like food and turn it into fuel, especially in such an inefficient way. Without fuel, we walk, read by candle light, pay more at the pump, whatever. Without food, we die. Tough choice. So instead of running the risk of people paying more attention to their energy usage, we run the risk of people starving, or paying more to keep people from starving AND paying more to make sure farmers grow corn instead of wheat or whatever. It’s like saying we’re going to start turning drinking water into fuel (or whatever). Sounds like a great idea until there’s a drought.

  8. David Saunders Link to this comment

    It seems to me that people are endlessly buying new things because that is their satisfaction metaphor. People don’t buy more because they need things or because of the price. They buy because the want things. The problem is that most never realize what they’re doing and they continuously rinse and repeat.

    There are other problems as well, such as bullshit social “expectations” causing people to think “the more I have, the better I will be regarded”. Nail #2 in the coffin of controlling expenses.

    My opinion is that you should own in modesty, but always take care of what you have. Don’t buy flashy things or large quantities of them because they won’t make you feel better for very long. They guy you’re showing off to is envious, but you’ll get a lot more attention if you’re happy from the inside.

  9. Kudos on recommending The Millionaire Next Door. Fantastic book. Everyone should read it.

  10. I think you’ve confused a couple issues here and this is why the FCC is investigating this matter. We’ve all been conditioned to believe that bundling is the same as competitiveness and that just isn’t true. As more people have awoken to this problem, more are complaining and hopefully something will be done.

    Cable claims they have competition and as such offer channel packages at rates comparable to satellite, FIOS, etc. However what this does not address are commitments to increasingly longer contracts for service, an inability to buy and own the equipment versus renting it, and finally that shovelling loads of junk at me does not mean I have gotten what I wanted at a price comparable to the value provided.

    I can get phone service, internet access, and digital television service from my local cable company prices of around $150 for a couple sets, phones, etc. The problem is that this “competitive” price can never be manipulated. If someone offers internet to me at a better deal and I attempt to unbundle, the cost of the remaining services moves into an entirely uncompetitive realm.

    Is there really competition if when I attempt to take advantage of a $25 DSL offer from a competitor my remaining services jump up $25 each to more than offset any savings I would have realized?