Tag Archives: money - Page 2

20% Of Americans Believe They Will Be Millionaires

And not just whenever, but in the next decade. That’s about 4 times as much as the actual 5% who are millionaires, and more than twice as much as the number of British people that think they’ll be millionaires. It’s actually not that difficult to be a millionaire: a 25 year-old saving 450$/mo would have a cool million by the age of 70. But of course, by then a million will be worth a lot less.

From CNBC, via Neatorama

Netflix Has Jumped The Shark

The New York Times’ technology reviewer, David Pogue, talked to Netflix about the recent 60% increase of their DVD + streaming plan, and Netflix’s explanation is not what you’d think. Everyone thought their costs have been going up because the contracts they sign with media companies have been getting more expensive since streaming video has really taken off in the past couple of years. That’s not the case at all: Netflix’s costs haven’t changed much. Which makes you even angrier, right? Nothing in reality has changed in the past several months, but the price went up anyway. It’s like if Toyota suddenly decided to charge 32k$ for the Camry instead of 20k$. Not because the cost of producing it went up, but because they felt they could make more money.

Samsung Blu-Ray player with Netflix support


Apparently what Netflix wants is a paradigm shift away from the one they willingly introduced: “Free streaming. Awesome.”  It’s how you boil a live frog: put it in cold water, then slowly turn up the heat. First they had the DVD mailing service — this is how Netflix made it big — but no streaming. Then they introduced streaming. At first no one cared about it, because there was nothing worthwhile to stream and also, it was a pain: you either had to watch it on your computer or hook your computer up to the TV, which was then a pain to control. So because of that, it was free but limited to an hour per dollar amount of your bill (if you paid 20$/mo, you got 20 hours of streaming). But then they got a bunch of TV shows on the streaming side and got some set-top boxes (Wii, XBox, Blu-Ray players, etc) to support streaming and it started taking off. This was back when they cared about customers, so they increased their prices only a couple of bucks in exchange for unlimited streaming — awesome! They also added the 8$/mo streaming-only option which seemed nice of them, but which turned out to be the reason for the current price hike.

Photo by Andrew Magill


What that streaming-only option did was change the paradigm of what you were paying for: before, it was mainly a DVD at a time plus a poor streaming selection for 10$/mo; after, it was 8$/mo for a decent streaming selection plus 2$/mo for a DVD. So now streaming, which is hugely profitable for Netflix, took center-stage and the DVD service was just an add-on. And then someone made the following realization: “wait a second, people are only paying 2$/mo for DVDs, when they used to be paying 8$ for them! Go get ’em, accountant dogs!” So they walked themselves (and us) down this road from DVDs costing money and streaming being free, to streaming costing real money and DVDs being cheap, to “well, they both cost real money.”

What’s even worse is that, as Pogue points out, they still don’t have real competition. Even with the price hike, all the other services are worse:

  • Netflix: 1 DVD at a time for 8$/mo, unlimited streaming for 8$/mo
  • Blockbuster: 1 DVD at a time 12$/mo, expensive pay-per-view streaming (a lot more expensive than Netflix)
  • Hulu Plus: no DVDs, 8$/mo for unlimited streaming (same as streaming-only Netflix, probably worse selection)
  • RedBox: 8$-9$/mo for DVDs, no streaming (assuming you only keep the DVDs for one night each, but you also have to go to and from the machine; on the plus side, if you don’t watch that many movies, the cost will be a lot lower per month)
  • Amazon: no DVDs, expensive pay-per-view streaming — or 80$/yr (i.e., 7$/mo) for  unlimited streaming via Amazon Prime (more on this below)

So now their new price structure makes more sense: even with it, they’re still the cheapest, best option around. And they already have all your movie watching data and an excellent recommendation engine, which means they can make good suggestions for you to watch — something none of the other services can do. But they have still jumped the shark: it used to be Netflix was a no-brainer because they were cheap, had an excellent selection between the DVDs and streaming, and they were awesomely customer focused. Now they’re obviously just screwing customers as much as they can get away with (e.g., they took into account customer defection before the announcing the price hike), they’re not that cheap anymore, and their selection isn’t that much better. So what used to be an awesome company took a sharp turn for the mediocre.

For proof, the best value isn’t even their 16$ 1-DVD + streaming plan; instead it’s their 8$ 1-DVD plan + Amazon Prime‘s 7$ streaming plan for 15$. That’s the new no brainer because on top of the cheaper unlimited streaming, Prime also gives you unlimited free two-day shipping with no minimum purchase. If you buy 3 things a year from Amazon and save 4$ at a time on shipping, that’s another 1$ off every month: now it’s 2$ cheaper than Netflix. And you get your stuff in two days. And you still have Netflix, so you can still rate movies and get its good recommendation engine. And Prime video is available on the TV via a bunch of Blu-Ray players. What’s available via streaming is an open question, and it would be nice if someone made a comparison between all of the different streaming services’ selections, though Amazon likely has one of the better libraries.

But at the end of the day, this move by Netflix definitely means the end of days for dirt cheap streaming. On the bright side, for people that only care about either streaming or DVDs — but not both — your price just went down 2$/mo, so good for you.

Via The New York Times

2016: The Beginning of the End of the American Age

Yahoo! Finance has an article saying that by one measure of economic size — purchasing power parity (PPP) — China will surpass the US in 2016. That’s what’s predicted by the IMF, and it’s a lot sooner than the mid-2020s that most people thought. However, America will still be ahead of China by a different measure: that of exchange rates. The problem is that using exchange rates is flawed because China is still the Soviet Union’s rich cousin, and currency is not traded on the free market like the US dollar: it’s controlled by the Chinese state, and severely undervalued.

Purchasing power parity on the other hand, is what’s used by the CIA’s own World Factbook to rank countries in terms of the size of their economies. By that measure, the American economy was three times as big as China’s a decade ago; last year, it was about one and a half times bigger. The US has been the largest economy in the world for well over a century, and therefore the enormity of this milestone cannot be underscored enough. Before taking the reigns as the biggest economy, the only country America ever beat down was Mexico; after, Japan and Germany — at the same time. So what all of this means is that whoever gets (re-)elected in 2012 will be the last President to run the US as the undisputed leader of the world.

We could say that the British — from whom America took the economic lead at the end of the 19th century — did well for themselves… but then again, the US is as close an ally as the UK has. The relationship between China and the US however, is a much different animal — like if early 1900s Imperial Japan took over from Britain — and it will be interesting to see what the world will look like under Chinese economic hegemony. But, hopefully the Illuminati have some craziness up their sleeve to keep the West in power.

From Yahoo! Financial

Money CAN Buy Happiness

Get Rich Slowly has a two-part article on how to buy happiness with money. It’s true, money can’t buy you love or friendship, but it can still make you pretty happy if you spend it the right way. The article is a summary of a research paper called “If Money Doesn’t Make You Happy Then You’re Probably Not Spending It Right” (PDF), which  says that people are very poor judges of what will make them happy, and they end up spending their money on all the wrong things. The paper is written by a trio from Harvard, University of Virginia, and University British Columbia, so presumably they know what they’re talking about. Here’s what they suggest you do your money, instead of blowing it on your retirement like you know you want to:

  • Buy experiences, not stuff. After a month, that t-shirt or couch or stainless-steel fridge/washer/dryer combo won’t do anything for you. Instead, spend that money hanging out with your friends, or going on an awesome vacation, or both. And take pictures. In a few years, all you’ll remember is the good parts of what you did, and it’ll make the experiences seem even better. Stuff on the other hand, just ends up owning you with its constant demand of being paid off, cleaned, fixed, and upgraded.
  • Help others. If you’ve ever given a good gift, you know what this is talking about. Doing one thing to make someone else happy will make you happier than doing a dozen things for yourself. So buy people good gifts, give bums change, and help people out whenever you want. Maybe all those major religions were on to something.
  • Buy less expensive things more often, rather than just saving up for big ticket items. Do both if you can, but if it’s one or the other, ten dinners out at Applebee’s will probably make you a lot happier than one super-fancy one at Ruth’s Chris. And a cup of coffee from Starbucks every morning will probably make you happier than a new lamp.
  • Quit worrying about stuff. If it breaks, it breaks: unless you’re an emotional mess, you’ll deal with it and it won’t be the end of the world. And if you set up insurance for everything, you won’t enjoy it as much because you take it for granted. Obviously get insurance for stuff you absolutely need (like your car and house), but not for your Wii. It’s a waste of money for one thing, and it makes you appreciate it less for another.
  • Wait before you buy. If you just buy everything you want when you want it, you won’t appreciate it, and you’ll spend a lot of money on stuff you’ll never use like… lets see what’s on my desk: ah yes, an M&M Dispenser. And if you wait for a while, the anticipation makes it even better. Like waiting for a Christmas gift.
  • Beware the downside. Everything comes with good and bad sides. An awesome ski trip comes with a long flight, hauling a snowboard around, and sore muscles. A new puppy comes with all kinds of barking and cleanup and having to come home every 5 hours to feed it. Make sure the downside of the stuff you buy is worth the upside.
  • Beware comparison shopping. You look at two phones, and you want something that has a big screen and feels nice, and has all the apps you want. But they all do that, and before you know it you’re spending 100$ more on one that has integrated face recognition, which two days ago you didn’t even know existed, and two days from now you won’t even care about.
  • Ask the audience. If you want to go to Greece, see if other people loved Greece. If you want to go see Sucker Punch, don’t: it sucked. If you want to buy an iPhone, ask your friends if they love it. How much other people like something is biggest predictor for how much you’re going to like it.

Via Get Rich Slowly

The Psychology Behind Shopping Mistakes

PsyBlog has pretty comprehensive list of psychological pitfalls we irrational humans should watch out for when buying stuff:

  • Status Quo bias: sticking with stuff you know when there are better options available. For example, sticking with your bank even though they charge you crazy fees while others will pay you interest on your checking account.
  • Post-purchase rationalization: convincing yourself you made the right decision buying some gadget you’ll never actually use.
  • Relativity trap: seeing something marked down makes you think it’s a good deal, even if it never sells for the “original” price; think car dealership.
  • Ownership effect: the things we own are worth more to us just because we own them, so when we go to sell them, we price them above market value.
  • Present bias: we push good decisions off for later, thinking we’ll magically pay the credit card bill when it comes, so we might as well buy the thing we want now, even if we don’t have the cash for it.
  • Familiarity bias: kind of like the Status Quo bias, we like stuff we know. So when shopping, we tend to buy brands we’re familiar with, rather than making sure they’re the best deal. This is how most advertising works: you see it on TV, so you’re familiar with it when you see it on the shelf.
  • Rosy retrospection: remembering past decisions as being better than they actually were, and then repeating the mistake of flying with that mediocre airline.
  • Free: buying something just because it comes with a free something else. If you act now, we’ll throw in a free night-light.
  • Restraint bias: thinking that you can go to your favorite store and resist buying something, when that’s probably not true.


How To Make Money in Six Easy Steps

Inc.com has a great article by Jason Fried of 37signals on how to make money:

  1. Sell things based on qualities the buyer cares about
  2. Sell things you’d want to buy yourself — and are therefore passionate about
  3. Sell things for what they’re worth — people are happy to pay for quality
  4. Sell things using multiple pricing models to make the buyer comfortable
  5. Make your business profitable from day one: it gets you used to making money
  6. Practice selling things

Via GetRichSlowly