Not just rich people buy Playstations and Xbox’s

So far I haven’t seen a single comment that supports the original post (except from Scoble). And I’m not going to be the one to break that, but it’s gotta show how far off the mark your reader’s think you are on this one. Time for a more detailed post?

Here in Argentina that’s completely impossible.
A PS3 will cost aroud USD$1200 for us. And our monetary unit “peso” it’s devaluated 3 times under dollar (USD1= $3.10 peso).
Believe it or not, a 41 inch LCD screen cost about $15.000.
So, don’t be sad about your credit. Sure it will always be better than ours.

You guys crack me up. Robert, have you ever considered that maybe the big screen TV is the reason those people are poor in the first place?

My sister told me once about a class she went to with a debt adviser. The teacher told them that words like “big screen TV” make her nervous, because so many of the people she counsels have one.

I could make all sorts of arguments here, like the fact that movies at the expensive theaters in my town cost less than $8, or the fact that eating a home-cooked meal before or after the movie is cheaper and tastier than any movie theater hot dog I’ve ever seen. But that’s not really the point, is it? Do you really need a big screen TV? Are you really that willing to enslave yourself to an extra $140/mo for the next few years? Where will that leave you if you get laid off in two years and haven’t been “saving for a rainy day”?

I guess the PS3 will let you pass the time while you’re looking for another job, at least until the power company kills your power. Hey, there’s always a bright side, right?

i was waiting till the end of that post for the punchline…. but it never came.

This is completely irresponsible advice to hand out. American’s have a HUGE problem with credit already. It’s a simple fact – people need to STOP buying extravagent items (like “just a $1500 HDTV”) on credit. Your hypothetical $5000 purchase would take years to pay back with a typical ~20% rate. The PS4 could be out by the time they pay off their PS3!

Borrowing money to buy stuff like houses and cars is one thing. To buy a damn TV and game console is irresponsible. Someone link up the SNL commerical with Steve Martin selling a groundbreaking financial book “IF YOU CAN’T AFFORD SOMETHING, DON’T BUY IT!”

After getting some sleep I agree my post here is stupid.

Regarding my salary, I’m not making that much more now than I was at Microsoft. And, you gotta factor in our mortgage payments — they are a lot higher now cause Silicon Valley housing prices are twice what Seattle’s are.

On the other hand we’re saving $2,000 per month because we aren’t flying every other weekend to come down and see Patrick like we used to.

I also admit that my whole worldview is built around Silicon Valley which is over the top in wealth concentration.

“There is WAY too much being made about the price of these things.”

Um, no, actually you are making WAY too light about the price of these things. What about people who have families and can’t afford an extra $140 a month? Or even $40 a month?

Some of your other comments:

“I love the “save your money” kinds of folks. But you’d rather me go to a movie or go out for a dinner with Patrick and Maryam instead of stay at home and spend some money on a credit bill.”

“And, no, I’m not out of touch with the level of wealth in my own nation. Have you walked around a so-called “poor” neighborhood lately? I see big screens in almost every home.”

“Jonas: $140 a month gets you into upper middle class? Damn, where do you get your economics?”

What’s your deal lately? It’s tiresome to watch this trend continue: you make a somewhat absurd claim (not meaning to be rude or out of touch with reality) on your blog, people call you on it in the comments, you reply with some truly snarky comments, then eventually apologize. Why not cut out the snark-factor? It harms your reputation and your image as a friendly and agreeable guy.

Good to see you reconsidered your post.

I saw a stat a couple of months ago that showed that the average american family has $10,000 in credit card debt. Most have pretty bad interest rates, too.

Add to that the median household income is $46000. Do the math for a family of four to live on that – and then the math for say an APR of 19% on $10,000 and see what kind of trouble you will run into. A major car repair or dental work if you don’t have insurance will pretty much put a huge dent in your regular monthly budget.

The fact is our consumer culture pushes us to have more, have more. We should be saving a whole hell of a lot more!

–*Rob

That’s very gracious of you. Cool.

er, sorry I was rude.

> Why not cut out the snark-factor? It harms your reputation and your image as a friendly and agreeable guy.

I think Robert’s a great guy, but I don’t think he has cultivated an “agreeable” image. The controversial statements and rash claims are very much a core part of the appeal

That said, this particular post could have really used an addendum. Even though someone _can_ buy outside of their means using the silly amounts of credit that get extended to US consumers who cannot really afford it – they should think twice about actually doing it.

A quick google search reveals that “$44,389″ is the median US household income for 2005. Do you really think that someone who makes that much money for let’s say a two person family, can or should afford a PS3 or an HDTV? Come on.

They could buy a new TV, or you know.. eat, pay rent, or save money for college…

Igor: I assume my readers are smart and won’t just listen to me when I tell them to jump off the Golden Gate bridge.

Also, I never advocated taking money away from essential budget items to buy an HDTV. I advocated taking money off of the other entertainment expenses families often spend money on. My brother-in-law, who has two kids, often goes to the movies. I know other people who spend thousands on tickets to football games and other entertainment venues. I walk around Las Vegas and see many families there spending money like it’s going out of style. Certainly more than $140 a month worth. Or, go to Disneyworld in Orlando. A trip there costs thousands for a family, yet I always have to wait in line to get on roller coasters there.

Robert,

Please stop trying to defend your limited economic view of America. It’s obvious that you still don’t get it.

I’m glad that you get to travel to LV and Orlando but I have a feeling that some of the people that are complaining that PS3s and XBOX360s are too expensive aren’t at Las Vegas and Orlando spendy money Willy Nilly. They are at home worrying about their next paycheck.

I have a feeling that you didn’t by any chance drive into North Las Vegas, you know where real people live and see such rampant spending on everything and anything.

This is one of those times where you say, “I’m sorry” and stop.

That was dumb.

@18 and @55. After reconsidering, you seem to be on the same page as rest of the world. The rationale that you see big screen TVs in poor neighborhoods just tells you 1 thing: gives you an explanation of why we have so many foreclosures & repos. Someone buying a big screen TV does not mean they can afford it. It doesn’t mean anything. But when you see the debt figures of the nation as a whole, it does give you some answers. Fiscal irresponsibility has become the norm here. I think PS3 is extremely expensive. Just to put things in perspective, I bought a condo last year costing $150K for which I paid in cash(no mortgage). But, I still drive my 97 Toyota which also I had paid in cash. I have no loans/mortgages, which means in the long run, I can not be thrown out in the street ever. BTW, did I mention I am 28? That would make me Sony’s prime target consumer with enough $$ to spend, but who refuses to spend huge amounts of money on a PS3. Price it under $400 & we will talk about it. Till then, I will donate to charity. There are enough hungry & poor people in the world.

Matt: I do dumb things once in a while. Like my disclaimer says, I don’t guarantee the quality of the info here.

One thing, though, is I trust my readers to be smart. If I said to jump off of the Golden Gate Bridge, I expect that none of my readers would do that.

Robert,
My son has an X-box that I bought for him (I thought it was way to expensive).

The view of the forest from Space looks different than the view from the within the forest.

You see the swarm you stired up talking about money from even from the most well off people. Now you know why it is so hard for couples to talk about money or even … heaven forbid; say no once in a while to a wanty want.

Keeping up with the Jones’is a way of life. Gettin the big Johnson is not what everyone has been told they will get if they exceed the bounds of reason.

Now that the conversation is beat to death, lets talk about religion or how about Politics. LOL

Sometimes a cigar is just a cigar! Right Bill. ; )

46 — Not a bad point, but it’s based on the assumption that you have $5,000 for the full five years. If they had $5,000 at the start, they wouldn’t need to borrow it at 19%, would they?

The things you own end up owning you. That being said, for the cost of PS3 plus accessories, I’d rather build a MAME arcade cabinet or buy a Mortal Kombat or Street Fighter arcade cab for the gameroom. Cool item to have and would be at least as much fun to play with friends, IMHO.

*Runs towards Golden Gate Bridge.

Robert, you are right on with this.

“I walk around Las Vegas and see many families there spending money like it’s going out of style. Certainly more than $140 a month worth. Or, go to Disneyworld in Orlando. A trip there costs thousands for a family, yet I always have to wait in line to get on roller coasters there.”

The questions you have to ask is what the entertainment value of this setup versus 3 trips for the family @$2800/ea over the 5 year period. Personally, I would choose the trips over TV and video games. (I would choose the TV & gaming over going to the movies though.)

The biggest problem is or society just wants to have it all. The big vacations, TV, gaming, and movies. And too many people get into uncontrolable debt because of it.

Re: 65

I can’t see spending that kind of money. I am all for spending money on entertainment, but the cost to enter that game is far too high. I’m a young, single professional. Basically, the prime target for these systems.

I will be investing in Nintendo’s offering and hoping for the best. Otherwise, I’ll stick to PC gaming where dollar/entertianment hour is a lot cheaper.

World of Warcraft, anyone?

Scoble, I don’t care what the hell you do with your money or how you choose to spend time with your family. That’s for you and your wife to decide. But, don’t come off like you know WTF you are talking about when it comes to personal financial advice and how the other half lives, because it’s clear you don’t. But, hey, if you have no problem showing yourself to be a moron, it makes for great entertainment.

It’s true in the US, but here in Colombia where movie and hotdogs+coke for 4 people is just USD25 and a guy like me who holds a MCSD earns USD12.000 a year, 600 buck for a game console it’s WAY off.

Maybe we are not Sony’s target market, but the situation it’s pretty much the same starting at Texas’ border and all the way down to Argentina, IMHO THAT is a significant market!!!!

#67 said
46 — Not a bad point, but it’s based on the assumption that you have $5,000 for the full five years. If they had $5,000 at the start, they wouldn’t need to borrow it at 19%, would they?
Comment by Jeremy — October 12, 2006 @ 11:45 am

Caught me! Good eye!
You are right – and most people don’t have 5k lying around to invest, and investing 5k for 5 years does deprive you of its use, no doubt.

My point is that if you can defer a 5k purchase, you can end up with 3052.55$ extra on hand, AND your original 5k. Sure, you give up having a ps3 and a big HDTV for 5 years, but you paid yourself 3k to do that. Getting paid 3k to NOT do something for five years isn’t such a bad deal. If you don’t have 5k on hand, and can’t save that much, (like me!) you still aren’t spending 1,376.06$ for the privelge of borrowing money. That difference might be the total cost of an equivalent HDTV+PS3 in five years, anyway.

The point that I think is more important is that if you want to know why rich people tend to stay richer, and poor people get poorer, it’s that even in this tiny case, you get an income difference of 14,400$/5yrs. That works out to an income gap of about 3k per year (rounded up), all other expenses remaining equal. For some of us, that is a lot of cash.

==original scenario, repeated for clarity==
Invest 5000$ at 10% for 5 years = 8,052.55+
Spend 5000$ at 19% for 5 years = 6,376.06-
The credit card calcuation was done using:
http://www.webwinder.com/wwhtmbin/java_cci.html

Total difference in income for saver vs. spender = 14,428.61

@69 – “Robert, you are right on with this…”

Actually he’s dead wrong with that.

Attempting to back up one’s financial views of the average American family by citing the spending habits of people (not necessarily Americans) at two popular vacation destinations is pure madness.

Most people go to these places with the explicit intent of spending money. How they get the money is inconsequential. They could have saved up for it, they could be burying themselves in debt for it.

Filtering America through a narrow lens is not reality.

If you go by Robert’s view of Las Vegas (which I have a feeling doesn’t extend beyond tourist locations) everyone there should have HDTVs and the latest tech toys in their home.

Oddly enough, last time I went to visit my folks in Las Vegas, I didn’t see a HDTV sitting in my their living room.

One of the main problems with living in an ivory tower is that one doesn’t realise one is doing so; the ivory-clad domicile of one’s associates is assumed. That is precisely what you’ve done here, Robert.

Please consider the possibility that jetting around the world to event after event has de-sensitised you to the realities of poverty.

Please consider retracting – not apologising for – your original statement. I don’t think an apology is necessary, but you’ve demonstrated before that you’re big enough to go back on what you’ve said; this is another time when you should do so.

Please consider considering the world outside A-list blogging when making posts in the future.

What’s next? Telling people their blogs aren’t blogs or something? (see, I really do read your stuff regularly!)

I’m surprised nobody has suggested the logical reason that Robert is seeing big screen TVs in “poor” neighborhoods.

I’ve seen them too, though I know that most of the people likely didn’t have the credit to buy them. No, I’m not suggesting that they’re watching stolen goods, but that they’ve been suckered into the Rent-to-Own sphere. Between Rent-to-Own and payday loans, the people who can least afford it can live the American Dream.

Ever wonder why so many of these places are around military bases?

It’s not because enlisted men are full of cash.