Everything Is More Expensive

[RamblingMad]

How are you dealing with this?

https://www.bloomberg.com/news/arti...ddle-class-feeling-the-pinch-too?srnd=premium

"The cost of many products and services the upper middle class buys, from autos to college educations, is outpacing overall inflation. While having access to credit, these households are increasingly tapping into costlier forms of debt."

I went shopping for a new couch. I bought my last one about 5 years ago. I was blown away by how much home goods have increased in the price. The sales person was like: we have 5 year financing. Seriously, I shouldn't be financing a couch for as long as I finance a car.

The price of goods has gotten ridiculous. My significant other recently bought a new car. The initial financing they offered her was up to 84 months. That's insane. She ended up going with 60 months.

 

[TwoMisfits]

By being patient?

I'm almost kidding, but I'm not. We are at the phase where everything needs replacing/renovating in both the home and cars...and kids will be going to college in a few years. So, we set a goal every year for our "what are we doing as our large improvement purchase"...and then we keep our budgeted items for college funds/retirement and vacation (which has stayed in the $1K/person/year number, so Disney has been ruled out lately). I mean, I've told my mom I could spend $250K in one year easily...and still need more money to do everything I wanted for housing and cars (not even getting to college funds and retirement)...and I sure as heck don't have anywhere close to $250K/year to work with (heck, I haven't had 1/10th of that yet)...

Last year, we dropped the idea to replace our 2004 car (which has very low mileage, and no issues, so it wasn't "necessary", but "desirable") when we had a bathroom flood our house. So, we got the bathroom we wanted, spending in the areas that meant something for us, and repaired the house with the planned new car money.

This year, we again are putting off the car replacement to tackle a whole new entry (the door, sidelights, storm door, and framing on the interior and the exterior - plus a doorbell which we have never had) which tackles a major issue with our house again.

Next year, we are deciding between the back doors (2) and our outside garden areas (rotting wood) or the car...in 12 months, something will probably push us one way or the other - this year, the front door won b/c we literally can no longer easily make sure the door stays closed and locked due to some warping (and the framing around the single pane windows is starting to crack - that won't work long) - so, safety issues win for us all the time...

But this is a long way of saying...we don't buy much b/c we want it...we try to buy when we need it and can afford it. So, the pricing effects what I can get when I want to do the replacing, but does not stop me from actually replacing...and it's the same for vacations - we will take one with our budget - it just may not be the one we might have planned for the year if money were no object...b/c for us, money is always an object...

 

[Anthony1971]

If one wants the best of everything than one must pay for it.....
There are still very affordable cars--you can easily walk away with a number of cars brand new all in for under 20K. Two years ago my father who is older got a brand new Toyota Corolla all in for a little under 16K. Don't want hub caps and using a key annoys you well......... , home goods and just about everything else.
Years ago otherwise luxury brands came out with lower end products to cater to all of those who wanted to buy those products... Gone are the days of lower end high end cars and therefore more expensive as people just where not buying them anymore.... As far as home goods you can get decent furniture even at Bob's but that style is not what a lot of people want... so Bob's makes the more luxury looking items that are crap but still cheap.... sometimes one must buy what they need not what they want.

 

[kymom99]

I feel like quality has suffered too. I've often said I was better off 15 years ago than I am now, even making less money then. My pay did not keep pace with inflation, that's for sure. OP, I bought my last living room set, sofa and love seat both reclining, for something like $700 back in 1999. They lasted 17 years. well, the sofa did. The fabric on the love seat tore sooner because we sat in it so much. We replaced the couch 2 years ago with a la-z-boy recliner sofa that I paid around $1200 for. Not leather or anything. My kitchen and bathroom are so outdated, you would probably laugh, but there are so many other things that rank much higher.

 

[RamblingMad]

I'm not talking about luxurious stuff. I'm talking about a couch that I bought for less than $2k five years ago now costing $5k. But that's okay since financing has gotten out of control. I'm talking about non-luxury car dealerships offering outrageous terms (84 month terms are crazy), so that they can raise prices. I'm saying that financing has created ridiculous prices because folks will pile on debt.

I want to hold off until the next recession to make big purchases, but this expansion keeps going and going. Both myself and significant other replaced our cars last year. Mine had 142 thousand miles on it. Hers had 162 thousand miles on it. Both needed significant repairs to keep running. It was throwing money after bad, so we both replaced our cars.

 

[Happyinwonerland]

I feel like we are at a breaking point and we will enter a recession soon in order for things to level back out. The current climate feels very much like 2007.

 

[RamblingMad]

I feel like we are at a breaking point and we will enter a recession soon in order for things to level back out. The current climate feels very much like 2007.

It feels like 2004-2005 to me. I'm seeing lots of LV purses again. I'm seeing folks buy more house than they can afford. I'm seeing parents buy their kids luxury cars again. It's like its okay to display wealth again even its funded by debt.

Nevertheless, it's the financing that bothers me. I have to pay more for something because folks that cannot afford it are willing to take on debt. I don't see this in homes yet. They're growing between 3-5%, which seems high, but it's nothing compared to the last housing boom.

But I do find this frustrating.

 

[DLgal]

Things are more expensive, for sure, but our income has outpaced inflation over the years. We are making over 50% more than we were 10 years ago, so it hasn't really affected us much in a day to day way. I do feel like we aren't really getting ahead, though. We have maintained the same rate of long term savings (retirement, college funds) over the years, but haven't been able to build up a significant liquid savings account. I feel for those whose incomes have stagnated and have to deal with the ever increasing costs of everything.

 

[RamblingMad]

Things are more expensive, for sure, but our income has outpaced inflation over the years. We are making over 50% more than we were 10 years ago, so it hasn't really affected us much in a day to day way. I do feel like we aren't really getting ahead, though. We have maintained the same rate of long term savings (retirement, college funds) over the years, but haven't been able to build up a significant liquid savings account. I feel for those whose incomes have stagnated and have to deal with the ever increasing costs of everything.

Our income growth has easily surpassed inflation. However, you know something is wrong when someone making six figures starts complaining about how much LEGOs cost.

 

[DLgal]

Our income growth has easily surpassed inflation. However, you know something is wrong when someone making six figures starts complaining about how much LEGOs cost.

LOL. I have always complained about how much LEGOs cost! They have ALWAYS been expensive. They are getting crazy now, though. My husband and one son are HEAVY into legos. We have lego models all over our house. They have only not invaded the master bedroom at this point (I am holding firm on that!). We seriously must have over $50K worth of LEGO. I am painfully aware of how much those things cost. Luckily, they are a "toy" that really holds its value. You can keep them forever. My husband has one Star Wars minifigure that is worth a few hundred dollars. ONE FIGURE! It's nuts. In fact, Lego has been a better investment than anything else for people who purchased and sat on unopened sets. People have made better returns on those than any other investment vehicle. I read an article about that recently.

 

[RamblingMad]

LOL. I have always complained about how much LEGOs cost! They have ALWAYS been expensive. They are getting crazy now, though. My husband and one son are HEAVY into legos. We have lego models all over our house. They have only not invaded the master bedroom at this point (I am holding firm on that!). We seriously must have over $50K worth of LEGO. I am painfully aware of how much those things cost. Luckily, they are a "toy" that really holds its value. You can keep them forever. My husband has one Star Wars minifigure that is worth a few hundred dollars. ONE FIGURE! It's nuts. In fact, Lego has been a better investment than anything else for people who purchased and sat on unopened sets. People have made better returns on those than any other investment vehicle. I read an article about that recently.

I have a LEGO room in my house. I understand the obsession. It's crazy what those sets cost now.

 

[vacationer1954]

"The cost of many products and services the upper middle class buys, from autos to college educations, is outpacing overall inflation. While having access to credit, these households are increasingly tapping into costlier forms of debt."

https://www.bloomberg.com/news/arti...ddle-class-feeling-the-pinch-too?srnd=premium

How are you dealing with this?

Changing our behaviors and expectations. We're actually doing a lot of downsizing, cutting things loose rather than accumulating more things; trying to make use of the things we have rather than acquiring new things.

This is the new normal. Adopting a "living with less" attitude is perhaps the only way to confront four decades of flat wage growth that has gotten so severe now that the average person spends most of their working life falling behind inflation.

 

[MillauFr]

Cars are very expensive. I refused to pay so I go without one. I would rather spend that money on Disney

 

[LilyWDW]

I feel like we are at a breaking point and we will enter a recession soon in order for things to level back out. The current climate feels very much like 2007.

100%. Economists are already talking about one within the next few years. There are many red flags starting to show up. The growth we are seeing is simply not sustainable and will need to balance back out.

 

[barkley]

stuff goes up in price but the article seems to point the biggest areas more spending/higher cost being in is the area of cars and college. i think to some extent it's a matter of 'what the market will bear'. when the economy got better and interest rates were super low people started buying new cars like crazy and some justify buying outside their means b/c of the environmental aspects, demand goes up-prices go up. same with college tuition. at some point long after i graduated in the 80's it became more common for parents to help w/larger chunks of tuition costs, and now people are practically accused of child abuse if they aren't planning on paying the entire cost of whatever far fetched, never will be income generating, overpriced college experience of their child's dreams. yes, college tuition has gone up across the board over the years but i there's a correlation between when those costs rose/the pace at which they rose and the numbers of parents using home equity loans or signing up for those unlimited cap parent plus loans. the amount people could pay increased so the educational institutions followed suit.

 

[RamblingMad]

100%. Economists are already talking about one within the next few years. There are many red flags starting to show up. The growth we are seeing is simply not sustainable and will need to balance back out.

I have been hearing about this since 2016. We know one is coming, but folks really aren't prepared for it.

https://www.cnbc.com/2019/01/23/most-americans-dont-have-the-savings-to-cover-a-1000-emergency.html

 

[tvguy]

I can't disagree that prices have gone up. But I would counter that people seem to be more willing to spend money on options and extras.

I bought a 2018 Ford Flex with NO options on it. $31,000 sticker price, $27,000 negotiated price. Everything I needed was standard. I easily could have spent another $14,000 by adding fancy paint, sunroofs, power seats with memory, leather seats, etc. And apparently a lot of people are willing to cough up the extra money. My wife's similar 2000 Mercury Mountaineer cost $27,000 new, so I don't see a big price difference.

People are willingly getting into the cycle of upgrading their cell phones every two years at a cost of hundreds of dollars when their own phones work just fine.

And at the grocery store, plan your menu around what is on sale that week, not on what is on your list.

The art of saving money seems to be a lost art.

 

[vacationer1954]

The art of saving money seems to be a lost art.

I remember my parents saying that to me forty years ago and I'm sure their parents said it to them twenty years prior to that, and so on.

 

[tvguy]

I remember my parents saying that to me forty years ago and I'm sure their parents said it to them twenty years prior to that, and so on.

But apparently people are saving less , so it isn't avice anymore, it is reality. 1960-70 people saved about 10% of their income. Now it is about 3%. IMHO some of the reduction is by choice, not by necessity.

https://www.marketwatch.com/story/once-again-americans-are-not-saving-enough-2018-08-28

 

[SandyinMonterey]

We moved from California to the Southeast 3 years ago. I thought that everything would be less expensive in the South, especially after living in one of the most expensive states. But, not true. I’m finding many things that cost more. I used to pay $90 for haircut, color with foils (& doing roots) in California. Where I live now I pay $130 & that’s the cheap end here. Many places start @ $200 for that before I found the lady where I go now. Every time I go to the grocery store, prices increase. Lettuce was 99 cents, now its $1.50. Items at the grocery store didn’t increase by a few cents, it’s a substantial jump. Our cable bill just went up $25/month. My husband left a job in California where he (& no one else) received a raise in over 10 years (he’s been out of there for 3 years & they still haven’t gotten a raise). They took away bonuses & 401k’s long before that & benefits such as healthcare was pretty much non-existent. While things are better st new job, they’re already talking about no bonuses this year. Everything continues to cost more, just the cost of living & paying monthly bills but, in our case, income has not kept up.