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  • Valuing Your “Stuff”… Near Zero

    Posted by Carl from Chicago on November 22nd, 2007 (All posts by )

    One trend in housing is the ever-increasing size of the average American house. A drive through any city or suburb will show that new houses are growing larger, right up to the lot lines, and buyers perceive total square feet to be an important amenity. If you took the typical suburban family and put them in the house that they originally grew up in they’d generally shudder – only one bathroom for all those people, sharing a bedroom, and hardly any closets! Closets are viewed as a key amenity, with the ability to store racks and racks of shoes and clothes for all seasons is a virtual requirement.

    In parallel with this is the growth in off site storage. When I was growing up it seemed that few people I knew had off site storage, but it seems much more prevalent today. Storage for furniture, hobbies, collectibles and everything else that people can’t bear to throw out.

    While houses are getting larger and in particular storage elements & off-site storage is a growth industry, a different trend is going the OTHER way. Deflation, or chronic price reduction, is occurring with most of the “stuff” that people are storing.

    Here is one example – my new “blog” camera with a small footprint (it is pretty slim although the lends does pop out when you turn it on) was only $212 and it has 7 megapixels and a bunch of cool features, like when you tilt the camera 90 degrees the photos switch from landscape to portrait in “view” mode. This camera blows the doors off previous digital cameras that I paid over 600 dollars for just a few years ago.

    Fry’s, the gargantuan electronics store, has its post-Thanksgiving sale on Friday, and I can hardly believe how cheap everything is. For example:

    • A Sony 7.2 Megapixel digital camera for $77
    • A 32″ LDC HDTV for $377
    • A camcorder for $157
    • A Samsung 800-watt DVD Home theater system with DVD player, stereo, and surround sound speakers, for $219
    • A 700 watt microwave for $19
    • A cordless phone system with an answering machine and four remote handsets for $79

    Where does this all lead? Well it leads to this…

    “Get a phone for less than you paid for this paper” (which is $2, I think at the news stand).

    When you are justifying that big mortgage don’t justify it by the requirement to store all of your stuff… you’d be better off just throwing most of it out and buying new stuff, at least from a financial perspective. The cost growth has been in services, taxes, land and commodities, not hard goods.

    Cross posted at LITGM

     

    6 Responses to “Valuing Your “Stuff”… Near Zero”

    1. Jonathan Says:

      Spot on.

      A lot of comparisons that are made between now and the past are wrong (in many cases, fraudulent) because they equate goods and services now and then. But today’s houses etc. are mostly much better along the dimensions that people care about. Many services are better too (transportation, shipping), and some of the services that are more expensive, notably medical care, are quantitatively much better than previously. Productivity is higher than ever, and your labor buys more and better products and services than ever (except govt services and products and services in areas such as live entertainment, and perhaps education, which have not participated in the productivity growth of the rest of the economy).

    2. Shannon Love Says:

      I grew up on a farm and on a farm storage cost are very low. You develop the habit of saving everything, even junk on the off chance it will prove useful. It’s surprising how often we solved problems by improvising with some previously useless object we kept around just in case. In addition, I was raised by my grandparents who came of age during the depression. Reduce, recycle, reuse wasn’t just a hippy slogan for them.

      As a consequence, I am a natural pack rat, I don’t like to throw anything away because I always feel like I would find a use it someday. I eventually realized that I wasn’t on the farm any longer and that the cost of storage, in terms of clutter and inconvenience if nothing else, far outweighed any possible future benefit.

      I also realized that having a few well organized, often needed items, made work and life go faster and easier. I discovered this one day after spending an hour and half looking for some nuts and bolts which I eventually bought for $2 and 15 minutes of time at the local hardware store.

      The hardest part was learning to purge books. Now I go through my library several times a year ruthlessly purging all but the most useful or most sentimental books. With iron discipline, I can cut down my library to just a couple hundred books.

      I’m really looking forward to practical ebooks.

    3. Jonathan Says:

      Correction: I wrote “quantitatively” but meant qualitatively.

    4. Dan from Madison Says:

      Good post. I have given up buying top of the line anything, and have gone the complete other direction – bottom of the line. I just bought a laptop for $350 and expect to toss it in two or three years and buy another one – for $150. My last digital camera was $129 and I expect to toss it in two or three years and buy another one – for $50.

      This aspect of your post is what boggles my mind…the cost for once pricey gadgets is mind-numbingly low and tumbling all the time.

    5. Zenpundit Says:

      Cool camera!

    6. Douglas2 Says:

      Once upon a time I couldn’t resist buying bargains on things that I didn’t need at the moment, but knew I would need someday — a deadbolt lock for a few dollars on a closeout sale, for example. All of these things saved for a rainy day of course need to be stored and catalogued — not that I kept a card index or anything like that, but it is pretty useless having a deadbolt lock stashed away when you cannot remember where to find it when the time does come that you need it, and it is much more time-efficient to go to that nice local retailer who knows exactly where his deadbolt locks can be found, rather then to search randomly through your belongings hoping to find the missing one. On top of this, if you consider the difference in cost between the closeout lock and the cost of the locks that he has been stocking all of that time just in case you would need one, it seems a fair price to pay for the convenience.