As featured in The Wall Street Journal, Money Magazine, and more!

Search: ups


We live in an era of cheap, disposable goods. My closet full of clothing, much of it rarely worn, even though I sort through my wardrobe about once a year to eliminate items I no longer need, is a good indicator of this situation. For a good period when I was a kid, I wore hand-me-down clothes — as the eldest child, I received clothing from a family friend — and when an item became damaged, my mother fixed it with her sewing machine.

Prices for clothes have certainly increased over the last few decades, but clothing is not expected to last. When a piece of clothing becomes damaged, it’s easier and cheap enough to replace.

Broken ToasterBroken kitchen appliances, lamps, and other household devices past their warranty periods can’t be fixed with a sewing machine. Many would need specialized care by a professional, and with today’s disposable consumer culture, many people just opt for replacement rather than finding a repair shop and paying nearly as much money as they would to buy a new item.

Additionally, retailers and manufacturers have embraced the concept of planned obsolescence. To keep manufacturing costs low and to maximize profits, there is little concern for making products that last as long as their owners. This is a primary feature of high technology — a house phone sold fifty years ago may still function properly today, but a cell phone purchased five years ago not only doesn’t keep up with the latest technology, but it likely doesn’t work at all. Furniture built in the eighteenth century was made to last in a family for generations; IKEA furniture might last a few years under regular stress of use.

In Amsterdam, there is a small movement in opposition to this disposable consumer culture. The community has come together to repair its members’ broken items. Volunteers bring their tools and sewing machines to an open building several times a month and offer to fix any broken item brought to the gathering. This Repair Café helps reduce waste by encouraging reuse of broken items, and makes fixing an affordable alternative to replacement.

The government in the Netherlands, private groups, and individual donors have helped the Repair Café Foundation raise $525,000 over the past few years, and these funds have helped the organization create these gatherings at various locations across the country. These Repair Cafés provide a chance for consumers to make better use of their goods and for volunteers, particularly those with repair skills that might no longer be in demand, use those skills for a good cause.

Would Repair Cafés; be welcome in the United States? It’s not exactly a profitable business venture, and as such, is unlikely to draw much attention. The model, however, could easily be recreated, perhaps in low socioeconomic neighborhoods, to provide a money-saving alternative for spending money to replace slightly damaged items. Strong marketing encouraging consumers to exist in a cycle of buying and replacing comes at a price to retailers and manufacturers. If these expenses were redirected towards making better, durable products without planned obsolescence, consumers might lose the desire to constantly have new items, and would be able to hold onto the same products for a longer period of time. There would be less waste. Companies and their shareholders would find they have more loyal, life-long customers. Customers would shop with a focus on the differentiation in quality rather than with their tunnel-vision focused solely on price. Companies that build their products to last would succeed while those focused on the short-term would fail.

Could Repair Cafés be an answer to the consumer culture of disposable products? Would the availability of free repairs in the United States change the way consumers buy goods, and thus force companies to build products that are made to last rather than go obsolete? Is the trend towards disposability reversible at all?

Photo: phozographer
New York Times

{ 10 comments }

Yes, it’s frustrating to need to reach for my wallet and type in my credit card number every time I want to complete a purchase online. According to a recent MasterCard and Harris Interactive survey, 58 percent of consumers agree with me. Consumers even abandon their online shopping carts when the check-out process requires too much effort.

That might be good news for consumers. If a small barrier is all it takes to prevent someone from making a purchase, perhaps that purchase was not a necessity. Leaving more money in the bank rather than spending that money on some product that does not drive enough desire to get through a relatively painless process can only be beneficial to the shopper’s financial condition. Retailers, on the other hand, will obviously see consumers’ lack of purchase consummation as a problem, directly affecting sales and revenue.

The solution is to store the details pertaining to your payment method so it can be automatically retrieved at the point of sale. Amazon.com is certainly a pioneer with this approach. This company’s one-click purchasing process using stored credit card or debit card information makes buying a smooth process, although it created an uprising about patents when this feature was introduced many years ago.

PayPal has a good solution as well. Stores that allow payments through PayPal enable users to associate a credit card and avoid the need to type in a credit or debit card number each time.

Consumers can also use browser add-ons or downloadable programs, like LastPass, to store credit card information retrievable with a click or two.

Purchasing items online is much safer and more secure than being out in the world, carrying a wallet with all your credit cards and cash, and handing your credit cards to a waiter or gas station attendant who disappears for several minutes. Online security, as long as you confirm you are visiting a secure website, is trustworthy. No one is going to intercept my secure internet connection when I’m buying something online, and for the most part, I trust companies not to expose a database of credit card numbers to the public. That exposure is just as likely to happen when shopping in brick-and-mortar stores as when shopping online. The situation is unlikely, and shopping online does not add to that risk.

There is no universal solution, a one-click purchasing experience like that on Amazon.com, available to all retail websites. But there is also no equivalent to the one-click purchasing experience when you shop in store locations, either. Swiping a payment card or transmitting a secure wireless signal from your mobile phone gets close to the experience, but you still need to take out your wallet or your phone.

While retailers want to make it easier for consumers to pay money, consumers should be careful about making this process to automatic. Trading money for an object of some type should involve at least some opportunity to stop and consider the purchase. Technology makes it incredibly easy for consumers to part with their cash or increase their debt burden, and retailers want to make it easier. Consumers should be working against that trend and moving in the opposite direction.

If not, retailers will soon be able to simply reach into consumers’ pockets and take that money. Some companies offer free trial periods for their products and services without making it blatantly obvious that customers will be charged at the end of the trial period. Some create significant barriers to canceling the service in advance of the ending of the trial period. Consumer groups often criticize these policies, and some might be considered scams. If consumers make it increasingly easy to give up money without thought, then we’re just as much to blame.

Photo: Håkan Dahlström
BusinessWire

{ 9 comments }

How much time do you spend in front of the television, socializing with friends, or watching movies? I freely admit that I spend too much time watching television. There are certain television programs that entertain me, and particularly during stressful times in my life, I need some type of outlet that makes me laugh, raising my spirits. As a single man living alone, I don’t have the opportunity right now to unwind at the end of the day by spending time with family.

This is, of course, an excuse or a rationalization of why I don’t just spend more time working. A new study, wherein the researchers’ intent was to reevaluate whether the consumption gap between the wealthy and the poor grew alongside the income gap between 1980 and 2010, also has indicated a correlation between education level and leisure time. The authors of the study then make the connection from education level to wealth, when asked by the Wall Street Journal.

Low-educated men saw their leisure hours grow to 39.1 hours in 2003-2007, from 36.6 hours in 1985. Highly-educated men saw their leisure hours shrink to 33.2 hours from 34.4 hours… Low-educated women saw their leisure time grow to 35.2 hours a week from 35 hours. High-educated women saw their leisure time decrease to 30.3 hours from 32.2 hours. Educated women, in other words, had the largest decline in leisure time of the four groups.

Movie marqueeThe higher a person’s level of education, the less time they spend on leisure activities like watching television, going out to see movies in a theater, socializing with friends, talking on the phone, and playing games. The study authors content that as unemployment has grown at a higher rate for lower-education individuals, that factor has contributed to about half of the change in leisure time for that segment of the sample.

How do we get from a measurement of education to a measurement of wealth? The study authors contend that education is a proxy for wealth, as level of education tends to correspond with income. There are probably some pieces missing in this leap from education to wealth in general, but if nothing else, a higher education opens more opportunities for traditional methods of earning income. (There are always counter-examples, with Ivy League dropouts forming companies that go onto being worth many billions of dollars, but that is exceedingly rare.)

No one is pointing to a causality — that working more and spending less time on leisure activities alone — will result in an increase of income. But if there is a correlation, it makes sense. There is, however, a perception that those at the top of the corporate ladder, earning more money, do not “work harder” than rank-and-file employees. On the job, employees during the grunt work may work just as hard or harder as an executive whose primary function seems to be attending meetings and farming out work to his or her underlings while consolidating reports and presenting reports to the Board of Directors, for example. This study doesn’t look at how hard one works at the workplace, but at how much leisure time is used outside of the office.

There is a message: get to work. Those with higher incomes spend less time on activities outside the office that aren’t productive. Family time is excluded, of course. Highly-educated individuals (who we’re assuming are also earning higher incomes) are more likely to spend time at home cooking and caring for children.

Do rich people work harder? Can less time wasted on leisure activities like watching television translate to higher income?

Photo: angeloangelo
Wall Street Journal, National Bureau of Economic Research

{ 12 comments }

Dr. Cornel West is a Princeton University professor and author. Tavis Smiley is a television and radio talk show host and author as well. The two have known each other for a long time, and last year they toured the country to hear from citizens and talk about the issue of poverty in America. After their travels and discoveries, they published a new book together, The Rich and the Rest of Us.

The central concept of the pair’s appearances, including visits to news programs and public speaking, is that poverty is largely ignored as an issue. When Mitt Romney explained that he wasn’t concerned about the very poor thanks to the systemic advantages this class is afforded, Romney was speaking from the system’s perspective.

Cornel West and Tavis SmileyMoney rules politics, and only groups with significant amounts to pledge to campaigns or lobbyists can influence public policy. It’s the way our democracy is designed, and it’s not much different than when the country was founded. The primary difference is that wealthy corporations, not just wealthy individuals, have a bigger influence today. Democrats or Republicans, the power of money is the same.

Smiley and West offer an interesting statistic. They claim that one in two Americans — half of this country’s population — deals with poverty. 150 million people are in or near poverty, perhaps just one lost paycheck away from spiraling into a financial situation that could be difficult to fix. The authors are also including “new poor” in this figure, and the “new poor” are the former middle class.

I’d like to get a chance to chat with either of the authors about this concept. Is the middle class truly poor? As a group, they are certainly better off than those in abject poverty. My understanding of middle class — and I realize that there are always ways to interpret classes differently depending on one’s perspective — is that today’s middle class is generally working, earning a paycheck, and somewhat able to spend beyond the basic physiological needs like food and shelter.

On the contrary, the middle class has faced unemployment over the last few years, and for many, this has been a struggle for families. Unemployment has enabled class mobility in a negative direction, removing families from the particular designation of middle class. Families remaining in the middle class live paycheck-to-paycheck, so the loss of that consistent source of income combined with the difficulty of replacing a middle class job could lead a family into poverty. For many middle class families, debt is a way of life, and allows people to “afford” a living that appears to be like their neighbors’.

To work towards the solution of eradicating poverty in the United States, the two authors want to see President Obama or whoever receives the office after the next election set up a conference on the issue. They would like to see the government move forward with a massive job program, investment in education, and abandonment of austerity policies. This is not a solution to poverty, and I believe the authors realize this. It’s intended as a beginning, a way to keep poverty in the forefront of political discourse, and encourage smart people to get together and work on solutions to poverty.

It’s hard not to compare Smiley and West with their hero and the hero of many others in this country, Dr. Martin Luther King, Jr. The issue of poverty of worthy of as much attention as the civil rights movement received in the 1960s. Where the comparison fails is that Dr. King had the ability to foment a revolution. The public, for the most part, saw civil rights as an important issue. The time was right, with a public ready to be involved, empowered to force a change. Dr. King took his message to the streets; Smiley and West are taking their message to the streets, selling a book, and charging admission to their talks.

For poverty to become the lead story in a system that pays attention only to the issues prescribed by those with money, there needs to be an uprising, a revolution. An apathetic public without the feeling that the issue of poverty is personally relevant will not rise up. There might be a thought that the Occupy-branded protests show that the public is ready to support a major issue like civil rights was in the 1960s, but I don’t think it’s ready yet. The Occupy-branded protests are too small and too unfocused to make the necessary impact. If Smiley and West want to influence the way Americans think about poverty, they’ll need to take a page from Dr. King’s book, and do a better job of getting people to care about the issue and see the value of change.

Here’s a clip of Tavis Smily and Dr. Cornel West on Face the Nation (sorry about the advertisement first):

The pair also appeared on Stephen Colbert’s Colbert Report recently for an entertaining interview.

Photo: DC Central Kitchen

{ 16 comments }

Your B of A Satire Website Targets Bank of America

by Flexo

The Rainforest Action Network is an environmental non-violent activist organization, working to influence corporations to consider the environment during the course of business. They’ve had Bank of America in their sights in the past, bringing attention to the way the bank puts profits ahead of the health of the communities in which it exists. The ... Continue reading this article…

4 comments Read the full article →

The Cost of Raising a Child With Autism

by Flexo

A few years ago, I shared a statistic showing that it costs almost $200,000 to raise a child, from birth to age eighteen. If that weren’t enough of a financial burden, consider that one out of 88 children are now diagnosed with autism, according to the Centers for Disease Control and Prevention (source, pdf). Regardless ... Continue reading this article…

11 comments Read the full article →

Are Stock Gains and Losses Real?

by Rob Bennett
Dollar and calculator

This is a guest article by Rob Bennett, a personal finance journalist and author of the blog A Rich Life. Rob developed the Passion Saving approach to money management; Passion Savers save not to finance their old-age retirements but to enjoy more freedom and opportunity in their 20s, 30s, 40s, and 50s. You naturally get ... Continue reading this article…

20 comments Read the full article →

More Fees for Bank of America Customers

by Flexo
Bank of America

Just when you thought it was safe, Bank of America and other large, national banks, are still finding ways to charge customers new fees. Only a few months ago, word of a new $5 monthly fee for debit card users sent Bank of America customers into a frenzy, threatening to move money away from the ... Continue reading this article…

9 comments Read the full article →
Page 1 of 2812345···Last »