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Money matters

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I remember in Junior High school when I could buy a bag of potato chips for 25 cents. Then there was a jump in price, with a smaller bag being sold for 35 cents. That was a big jump and it took a while before paying more for less became the norm.

There are distinct times in my life when I recall these kinds of jumps. Like when it was crazy to see gas be over 50 cents a litre, then the price jumped above 70 cents and when it dipped back down it never went below 55 cents again. Give us gas at 71.9 cents a litre for 2 months and suddenly we are quite happy to see 55.9, like it’s a bargain price. Now I’m checking my tank to see how much gas I have when the price is under $1.65, because that’s too good of a price to pass up.

I get that prices need to go up, but what I don’t understand is how this is happening while simultaneously banks, oil companies, and grocery chains are recording record profits. It’s literally a case of gouging the consumer and blaming inflation.

Rants aside, I’m up at Whistler with my family, my mom is visiting and has never been up here. We are staying in a wonderful hotel, a surprise gift from a friend, and my kids can’t get over the way people spend their money. Here, room service for 2 would be a fancy meal for all 5 of us… and no we didn’t order any, we just looked at the menu.

A day of skiing for our family, with 2 parents and 2 adult kids would be $1,200, and if the kids were under 19, $1,100, and under 12 would be $900. Most families are here for 3-4 days of skiing. Many have flights to pay for, and hotels here are not cheap!

But for some people, spending $15,000 to $25,000 for a vacation is… normal. For others that’s a significant portion of their yearly salary and out of the question.

It’s funny, you always hear, ‘money can’t buy happiness,’ and while I agree with that, there is something affluence does buy, it buys a sense of freedom. Money matters because when you have a lot of it, you don’t have to think as much about your spending. You want something? Buy it. You need something done quickly? Pay someone to do it for you? However, when you don’t have the freedom to buy whatever you want, when the cost is prohibitive, money really matters.

Prices have jumped significantly since Covid. There are more people struggling to make ends meet. There are more people choosing not to go out for dinner because the cost is just too excessive for a family. There are people who used to ski at Whistler who have been priced out of that option. There are many more people who don’t make a purchase without thinking of the cost. They don’t have the freedom to spend without thinking of the consequences of a purchase.

That’s what affluence buys, it buys free buying power that doesn’t feel nearly as free for less affluent people. Monet matters less as you get more. I’m not sure what the sweet spot is, where the transition happens, and I’m not sure I ever will. I just know I’m at one of those price jump times where I’m going to need to adjust to the price jumps wherever I look… I’m just not sure I’ll be adjusting to these new price ‘lows’ any time soon. It’s a time where money matters for a lot of us.

Prices up

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I don’t know how some families do it? How do they manage the inflation of prices we’ve had? My wife and I both make good salaries, and while we feel the crunch of significant increases in the price of groceries, we can manage. But a single income family with a job that is financially less rewarding than our double salary household has to be struggling right now.

Add to that the increase in interest rates over the last few years and looking at how much monthly that has gone be up, and there have to be families in financial trouble. We’ve reached a point in Canada where many conveniences have become luxuries. Foods and meals that used to be staples are becoming special treats. I saw a video clip from a European country where inviting friends over for dinner now routinely comes with a bill, their equivalent of a direct deposit request or Venmo. ‘We are happy to have you over, this is what it cost us and this is your share’.

I could never see myself wanting to do that, but if I was in a community of young adults who liked to party and not everyone could host regularly, I could see this as a thing… friends understanding that the hosts are put out more than anyone and so helping them out. While it makes financial sense, I see it as an undermining of the friendship relationship. It puts a price on friendship. Imagine going to party and getting a different bill depending on if you drank more or went for seconds and ate more. That would feel very awkward to me on either end of the transaction.

But it seems that’s how some young people are coping with the inflation of everything around them. They want to be social but don’t have the financial means to do so regularly without splitting the bill. To me, this is an example where high prices are not just affecting our finances, but also our sense of community. It’s a sign that our greater society are coping and not thriving.

At least people are still trying to get together… and sharing the cost is much better than being isolated. It’s just sad that this is, for a growing number of people, necessary.

Prices not as shown

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Recently I’ve been looking at prices for things like flights, car rentals and hotel rooms. In each case I see prices per seat or per day/night and then I get to the online checkout and I am paying so much more.

On a plane ticket, I am being up-sold for luggage and seats. Hotels and cars add additional taxes, and apps like AirBNB have added cleaning fees and other fees. A hotel that said $389 a night had a final cost of $528 after taxes and fees. That’s 35% more than the advertised nightly cost! In another instance, a $159 flight ended up being over $400 with checked bags, selected seats, and a changeable date (for a small additional fee).

It’s frustrating starting your buying experience feeling like you are getting a deal and ending the same buying experience feeling like you’ve been ripped off. I understand up-selling, but if I see a room cost per night advertised, that’s what I should pay, not 35% more for the same room.

I get that profit margins are competitive and narrow, but I don’t get this false advertising of costs that end up being so much more than shown.

That said, I have no idea how this can change? AirBNB isn’t going to start putting the total cost per night including all fees into their advertised price per night if Expedia and Travelocity don’t do the same, and vice versa. So we are stuck doing the math after we get to the checkout page, and invariably feeling a bit ripped off. That’s not a great customer experience if you ask me.

Price hikes and profits

I saw an article recently that said inflation has dropped to 4.2%, the lowest since August 2021. Yet our grocery bills are up 9.7%. What’s disturbing about this is that many grocery stores (or their parent companies) are reporting record profits. So are oil and gas companies while I’m paying $1.93 per litre of gas.

Some people can no longer afford their mortgage, others are being priced out of the market due to increases in mortgage rates, and yet companies are giving their shareholders huge returns. These price hikes we are seeing at this time are proof that the capitalist market ruled by profits is broken.

Shareholder good exceeds public good. Profits, not people matter. And those who can afford to be shareholders grow richer and richer while those who can’t afford the extra cash to invest suffer as their dollar is worth less and less… whether it’s mortgages or the price of eggs, what a dollar used to get you doesn’t go as far today as it did last year.

Got a 5% raise? That sounds great except food will still cost you more to buy than you had to pay last year, before your raise. In other words, your income is not growing as fast as your living expenses. And unless you are a shareholder getting great returns, that won’t change any time soon.

I don’t know how this changes? I just see a larger and larger gap between the haves and the have-nots, and the gap is widening. Is this sustainable? No. But what’s the solution?