Personal Finance

WTF: The Japanese have a frugality price point!

I don’t know if you’ve noticed this in the news recently, but Mrs. SSC pointed this out to me and then I found plenty more articles about it.

The short story is this (disclaimer, I’m no financial analyst): Japan economy was faltering and they wanted to boost revenue to help strengthen it. They did this by enacting a tax hike from 5% to 8% back in April. Many predicted their Gross Domestic Product (GDP) would grow by ~0.5% or so, and initially it seemed to be working. However, with the latest numbers that came in the countries spending contracted by 7% which led to a contraction of GDP by 1.6%!

The Japanese have a price point - I wonder how high the American's is?
The Japanese have a price point – I wonder how high the American’s is?

Yes, the Japanese have a price point. Their sales tax increased 3% and instead of stimulating the economy with the continued spending like previous quarters, the spending slowed up and shrank. As one person pointed out, You lose the benefit of the tax revenue if you can’t collect it and people aren’t spending money. Their price point is when their sales tax hit 8%. At 5% sales tax, they were spending just fine, but raise it a mere 3% and suddenly they’re rethinking purchases, delaying purchases and deciding they don’t need a lot of their GDP. Evidently, about 7% worth less.

This reminded me of a similar situation. Our local grocery store has pre-made hamburgers, not just shaped ground beef, but with mixes like blue cheese/black pepper, hatch chili’s and spices, or bacon and cheddar. You get the idea. They sell these for $6 for two patties. Yes, yes, all of you frugal minded folks reading this are thinking, “My God, why would you pay $6/lb for 2 hamburgers?! You can make them yourself for less!” Well, you’re right or at least I can make them for almost the same cost. I tried with the bleu cheese burgers and even my own pepper and spice burgers, and except for our homegrown pepper additions, when I priced out all the cost of ingredients, it was really close to their price. The point is, I am fine paying ~$0.50 more for the convenience of not dirtying up mixing bowls, and having to mix it myself, “You bet I’ll pay for that”.

BUT!!! Then they raised the price to $7…. Unbeknownst to them, they found my price point, and it was just a dollar more.

At $6 for the 2 burgers, I was fine and could justify the extra spend but $1 more, and it’s too rich for my blood! Wow, $1 more is too rich for my blood. Well, let’s think about that, because is it all about the extra dollar spent? No. It’s more the principle that I can make the same thing for less in either case, but with the extra $1 added, it just feels like it’s too much. I can’t pay that and feel good about it, so now I make my own. Are they as tasty and convenient? Well, not as convenient, and I haven’t gotten the texture right yet with the bleu cheese burgers, but they’re just as tasty and delicious.

Similar to craft beer. I’m no beer snob, but I can appreciate good beer, and usually have some of my own brewed in the fridge. However, I can’t justify paying $18 for a 12 pack of craft beer. It’s a price I can’t pay and feel good about, so I don’t. A week ago, the same store had a New Belgium Sampler 12 pack on sale for $13, and it was really hard to not buy 2, since it was such a good deal. I mean, the Budweiser or Miller products I also purchase are that same price and those are pretty unexciting mass-produced beers. So when a tastier beer is available for the same price, Hell yeah I’m getting that instead.

My point is I found it interesting that as a country, all of a sudden the Japanese found that they didn’t need 7% of the stuff they were buying. Again, I’m no financial anything, so go easy on how I might have gotten it all wrong, but it reminds me of our grocery post, where it was easy to find ways to not spend as much on “extravagances”. Not from being forced to, but from looking at what you spend and finding ways to cut back. After having this goal of FIRE dangling in front of me, I find it’s easier to find more and more areas where I can save or not spend because it’s going towards a goal of one day not having to work for anyone but me.

Have you experienced this, where you are used to buying something at a certain price and when it increases you just can’t justify it anymore? What are some things you found your price point on?

To buy, or not to buy…. Wait, what was the question?

I’ve come to realize that being aware of our budget and savings is a double edged sword. On the one hand, it’s amazing how much we’re able to save and be able to achieve FIRE in 5-7 years, on the other hand, I now am becoming unconsciously miserly and questioning every big purchase. That’s assuming the big purchase ideas weren’t killed automatically, before they could even take root and grow into an outlay of cash. For instance, boat, truck to pull the boat, riding lawnmower, exercise equipment, newer bigger T.V., etc.. Even big purchases I support, I wrestle with “Is this the right time for that purchase, and do we really need this?”

Recently, we’ve decided to purchase a dining room table and chairs. It’s a huge investment, and one we won’t be making again in our lifetimes, barring coming across an excellent deal at a yard sale in 30 years…. Ever since we married, we have used Mrs. SSC’s kitchen table and chairs. They work fine, and are perfectly functional. “So why are you replacing these things and not investing that new table money,” most of you are probably asking yourselves right now? Well, it comes down to simple aesthetics. I hate that kitchen table. I just can’t stand it. Evidently, I can stand it, because I’ve lived with it for 6 years now, but it just makes me throw up in my mouth a little every time I see it. Okay, it’s not that bad, but I really don’t like it. Let me paint a picture for you, and see if you can get on board with me.

The year was 1968, someone somewhere just pressed a nice oval tabletop out of particle board and sawdust, and thought to themselves, “You know, this would look great covered with a top of the line wood grain laminate. Unfortunately, we’ve just got this plastic wood grain laminate, but hey, it would still really “fancy” this table up!” To really sell this beauty though, they decided to add some of the world’s most uncomfortable chairs and, Voila! Our table was born. I have no idea where it started its life, or how it came to be in Mrs. SSC’s household but she grew up with this table and has some fond memories of eating at it, doing some arts and crafts at it, and who knows what. It’s like she tells me, “This is a perfect table for the kids to do crafts on, it’s impossible to mess up.” That’s the beauty of plastic laminate, you can do everything short of burning it, and it still looks like crappy laminate. To be fair, it’s in really good shape for a 50 year old table, and it would make an excellent craft sort of table the kids can spill paint on, carve pumpkins on, decorate Easter eggs, etc… I just think it should be relegated to that duty, and not sitting in a spot where I have to look at it every day.

It’s only taken 6 years, but I’ve finally worn down Mrs. SSC into getting a new table! Actually, I’ve come very close in recent times, only to have one little thing ruin the whole deal. There was this past Christmas season for instance, I had her decided on a table, finish, chairs, even use support from family in town for the holidays to help win her over, and we were set. Except the place we wanted to get the table from didn’t have the chairs she wanted, and she is very particular about chairs, so we never ordered it. Even though they had a very liberal, no-cost return/replacement policy, as in, we could order the chairs and if we didn’t like them, we could swap them out for different chairs at almost no cost to us (actual cost $150). But we wouldn’t be paying shipping for 6 chairs back to the store and 6 new chairs back to us (total cost ~$400). Anyway, that fell through due to stocking errors on the companies part. Then there was a few years back, and I was in a similar boat, but didn’t strike quickly enough, and that deal also fell through.

This time, I knew would be different. This time Mrs. SSC started the “Let’s go look at tables” conversation, and she hates looking at tables and chairs. We went to a store and they had about 30 chairs to try out. Even lining them up side by side so you could sit in one, and then scoot over to the other for a comparison. I didn’t get it, but they claimed it was “the best way” to try out chairs. Whatever… So we both actually found chairs that we both agreed on the style and that were actually comfortable. We also even found a table style that we both liked, and even a stain, it was all coming together so nicely. However, the cost was laughable, and while we weren’t out shopping to purchase that day, I realized I’d found my biggest hurdle, the cost. Fortunately, when we got home I researched everything online and found the exact same everything for 30% less, plus an additional 5% off due to the cost structure and order amount, and even an additional 3% off if we didn’t use a credit card, and didn’t make them (or us rather) pay the credit card service fee. This was the deal maker there, I mean almost 40% in savings, and we get the exact everything we wanted. And then Mrs. SSC went back into stall mode…

Mrs. SSC, “Well, this style is also nice, I like it too. You know, we could probably have my Dad make us a table just like this one. You know, you could make a table for us when we retire in another 5 years. Are we sure we really need a table, we don’t use this one much now anyway.” Mr. SSC “eye-roll, and slapping my palm to my forehead.”

After a few weeks of back and forth with different style choices, I had given up on it as this purchase seemed to be “tabled” again.

Then this happened out of the blue:

Mrs. SSC: “Have you ordered that table yet? I would’ve thought after all this time, you wouldn’t be waiting so long to order.”

Surprised Mr. SSC playing it cool: “Oh? I thought we were still deciding on the final style.”

Mrs. SSC: “Well, put together the choices again to review and we can decide.”

Mr. SSC: “Here is style A, B, and C…”

Mrs. SSC: “I like style B. Let’s get it!”

No less than 5 minutes later the order was sent in, and the check has been sent off. The table is ordered and soon we should be getting our new dining room set. Although to be fair, we don’t have a formal dining room setup, it’s just wasteful in our opinion, so this will be going into the kitchen area. This endeavor, while mostly complete made me think how many man-hours it took into getting this purchase approved and complete (~5 whole years). Mrs. SSC has some valid arguments, such as, “The old table is still functional, it’s a lot of money to replace something not broken, we can invest it and make more money with that money, it’s a perfectly fine table…” You could probably come up with some of your own arguments as to why we didn’t need to purchase a table. I would agree that we may not have needed to purchase the table, except for my heavily weighted dislike for this table. My thoughts are this, “Why wait until we get to FIRE and then look for a new table/chairs and start making big purchases? Why not do it now when we have incomes and can do this and not feel the hit?” I’m excited for our new table and chairs and unlike past purchases, I will be even more excited when it gets here and I can move that other table out of sight.

This is why allowances are an excellent idea. This type of debate gets avoided with most “want based” purchases by using allowance money and not general funds. This is our first long running debate over a big purchase though, and I hope will be our last. I don’t know if I have it in me for another 5 year sales job.

 

What are some big purchases you’ve made and have had to use years of convincing to get your partner to pull the trigger?

Death of a Cellphone

Monday 10/13:

Well, that day has arrived. The one where I go to use my phone and realize, “Hey it shouldn’t be acting like this. I’ll charge it, and maybe it will feel better… Why isn’t it recognizing the charger is plugged in?” So I unplug and re-plug the charger, still nothing. Check the charger port on the phone for lint, no lint. I think to myself, “Hmmm, it shouldn’t be acting like this, I bet the battery is shot, I mean it is 2+ years old. I’ll deal with it when I get home.”   I get home and the battery is really, really, low. So, I pull out the battery and go to Amazon to find a replacement. A few minutes and $10 later and my new OEM battery will be arriving in 2 days. Yeah!! In the meantime, I tell Mrs. SSC my cell phone is sick, and I plug the battery back in and try to turn on the phone and it’s stuck in a reboot loop… My heart jumps to my throat as I think, “Maybe it wasn’t the battery! EEEEP!!!” I try soft rebooting, hard rebooting, and nothing. I think optimistically, “Well…. maybe the battery is soooo low, it is stuck in this loop and can’t power on past this reboot point. I’m glad I ordered a new battery!”

 

Thursday, 10/16:

My new battery arrives and I think to myself, “Hooray, I get my phone back!”. While it has been kind of freeing to be without my personal cell phone, I’m now more worried that the phone may have caught something terminal and it isn’t just sick or in need of an organ replacement (the battery). I put in the new battery, power on, and now it gets to a new point in the reboot loop before it sets off the flash and the screen blinks off. It then begins to repeat this behavior. After several attempts at this with the same result, I take out the battery, and try charging it, thinking the new battery needs a solid charge on it, and that’s definitely the issue. At this point, I am the definition of insanity, trying the same things over and over and hoping for a different outcome. I search online and find some useful information regarding my specific issue. I found out that there’s only a 50/50 survival rate and the chances at resuscitating my dear little phone are looking more and more grim. So, I go back to Amazon and $6 later, I have a “USB jig” on its way to the SSC residence. Allegedly, you plug this in and turn on the phone and it forces it to go to a download mode, where you can monkey with things to get it to reset that reboot loop. I update Mrs. SSC on the news and she suggests that we should look into cell phone plans if I’m going to need a new phone. Begrudgingly, I start to research online, but out of sight of my sick phone. It’s not dead yet, just very, very, sick, and I don’t want to do anything to impede its recovery back to a working cell phone. I give it some words of encouragement before I start my research, “Hold on buddy, I’ve got the “jig” coming; that will fix you I promise! We’ll get through this!”

 

Saturday, 10/18:

The USB Jig arrives and the moment of truth is here. I put the battery back in my phone, insert the USB jig, yell “Clear!” and press the power button. Disappointingly, nothing happened. Except the reboot loop, and it wouldn’t even get past the Samsung logo. Poor phone, it’s sicker than I thought. I held out one last hope though that if I took it to the phone hospital (our carrier’s store) they may let me use a fully charged battery and give me an accurate diagnosis.

 

Monday, 10/20:

I took my phone into the local store, praying for a miracle. After trying to resuscitate it, we called the time of death at 10:16 am, Monday 10/20/14. Good-bye phone. You’ve served me well, and I hate to see you go. So, on to a new phone, but do we need a new plan at the same time? Should we stick with our current carrier, or try something different, something more frugal?

I remember a few months back reading about different cell phone plans on the cheap and with my love for “ghetto cell plans and the phones that come with them” I bypass them to go straight to our current carrier’s online store and start looking at new phones. J Holy cow, when the hell did cell phones start to cost as much as a decent lap-top?! I realize I paid a couple of hundred dollars for my last cell phone (the Galaxy S2), but I didn’t get the S3 because it was almost double the price. Yes, I’m cheap in some regards, but the S2 was great and worked awesomely, until it didn’t. But to upgrade to an S5 was $609 at our current carrier, and $509 on Amazon. I look at the Nexus and i-phones which were similarly priced. Whichever phone I researched,  they seemed to be way more than I want to spend on a phone.

So I researched different carriers thinking I could save some coin on our plan as well as a phone. I looked into a lot of them, but, I only dug deeper into Ting and Republic Wireless. Why those you ask? Well, Mrs. SSC was in love with the idea of Republic’s $5/month plan in which you only use wifi, and have no cellular tower connection. Sounds promising, but after reading some reviews, I realized this wouldn’t fit our current lifestyle. Their other plans range from $10/mo to $40/mo and as you pay more, you get moved onto cellular networks, but our current plan has us at $80/mo for both phones. So, I’m not going to a different carrier and incur a new phone cost for Mrs. SSC when her phone is still working fine, and not save money. It didn’t make sense for us to switch.

Then, I checked on Ting and their plans. I like the concept of their plan which is “you pay for what you use”. They put everything into different buckets marked SX, S, M, L, and XL and More. Looking into our current monthly usage, we would land in the $32/month category. Again only saving $16/month, which, yes, is almost $200/year, but with the hassle of switching carriers, getting phones for their systems, etc… It isn’t worth it to us currently. With our current lifestyle, we need something reliable that works everywhere and comes at a time when both our phones break or need an upgrade. So we’re sticking with our current carrier for now.

 

Wednesday, 10/22:

That brings us back to what to do about replacing my phone. As Mrs. SSC pointed out I can get a Galaxy Avant for $200 and that’s reasonable. She put down the edict that in her world, over $300 for a cell phone is unreasonable, and I would have to cover the difference out of my allowance. Ugh… I pointed out that the Avant is a downgrade on all levels from a phone that was 2+ years old. So, no, once I’ve tasted the good stuff, I can’t go back!! But seriously, who wants to spend a LOT of money on a brand new phone that’s already slower and takes worse pictures than your old phone? I settled on the Galaxy S4, it was $330 on Amazon and should be arriving today. Swap out my sim card, and I’ll be back in business. I’m sure at some point, I will downgrade my phone to some degree, and our plan will change to a cheaper one. In the meantime, I’ll have a small memorial for my old phone. Say some kind words, share a favorite memory I had of it, and then drop it into the electronic recycling bucket at work.

How do you deal with replacing cell phones? Do you just go with something that fits your needs and you don’t need the bells and whistles, or do you like getting the newest, latest, greatest phone out there? I compromise somewhere in the middle. Maybe the upper end of the middle, but I’m okay with that for now.