August 1 1981  – 38 years ago when MTV came to life and changed the face of music forever.  The first song?  Video Killed the Radio Star by The Buggles.

May 24, 1985 – AOL aka American Online was founded.  Connectivity for American’s changed forever.

June 29, 2007 – Apple introduces the I-Phone.  Do you remember the slogans?  “This is only the beginning” and “Apple reinvents the phone”.

All of that has impacted our lives and has changed how the average American lives financially.

Technology has changed the family finances.

Are you caught up in the technology rat race?  Is it busting your budget?

Wow, yes that came from Michael Tannery, a self-professed technology geek.

The change in the cost of parenting and living has increased rapidly over the last three and one-half decades and it leaves me wondering if it is out of control.

Is technology making our life better?

It is a great argument and we can argue both sides of the coin yet let’s look at the cost of technology in your home and auto and truly understand how life in the 21st century is vastly changed.

For our example family, I am going to use myself and regress us to look at what would be our monthly cost in 1995 compared to 2019. We will use a family of five in both comparisons.

Telephone– our house had one phone number with call waiting.  There was one in the kitchen and one in the master bedroom.   The basic cost was $39.95 per month plus taxes and fees.  Long-distance was Telephone extra.

Mobil Phone – we had two. It was not until the children were at least 16 that they began to have a cell phone and then all it would do was call and text.  The cell phone bill cost us approximately $200 per month for our phones and incrementally increased $50 per phone as the girls turned 16.  Yet what did the actual phone cost?  Nearly nothing if you signed a two-year contract.

Television – We had one TV, a 37 inch Sony Trinitron with a VCR.  I remember the TV costing $999.00 and the VHS VCR was another $200.00. We also had some form of cable TV and it was $39.00 per month

Computer – Original cost was about $1,500.  Just in case you missed the 1990’s it did basically nothing compared with what you can do today.  We did have a computer and it was connected to the internet with a modem (click here is you miss that sound)   AOL “hooked” you with a free subscription and then it was $19.95 per month.

Auto’s – I was one and still am one of those parents who said no to the entertainment system in our car.  We took road trips – they all have a story about what happened.  Books were read and the “alphabet game” was played.  Our monthly car insurance for a family of five would have been about $950.00

All in our monthly technology and car insurance cost was about $1,350.00.  (Including $100.00 per month for the cost of the computer, TV, and VCR)

Telephone – our house has no phone.  We all have cell phones.  The monthly cost for the five of use is right at $225.00 plus fees and taxes.   We have a data plan that works for our usage and most of us are good at being on WiFi.  What has changed is the cost of getting a new phone.  An iPhone 10 XS has a down payment of $129 and then 30 payments of $30.99.  The monthly cost is we all have phones on a payment plan.  Total monthly cost including tax and fees? $500.00

Television – We now have two smart TV’s.  They do so much more and together they cost just slightly more than the original Sony Trinitron. Total TV cost was about $1,200.00 at Costco for a 70 inch and a 55 inch.  They are both nearly five years old.
It’s the cost of cable and internet that has all of us looking to cut the cable.  We also have Netflix and HBO Go.  For internet, we have AT&T Gigabit Fiber.  (remember, I am a geek and I want speed) We have unlimited data – there are five of us on this plan!   Our cost is just over $315.00 per month for the service and adds $50.00 for the TV – Total $365.00

Computers and devices – this is where the cost has erupted.  Each of us has at least one device and some of us have two.  The ever-changing tablet versus laptop argument and the obsolesces that are created by “newer improved” operating systems and apps.  I have two, Tina has one and there are another 4 in the house.  I made the switch from my iPad to my Surface Pro Laptop a year ago as my iPad was approaching 6 years of use.  It is now located in the kitchen and is used to be the music playing computer for our Sonus music system.

Thinking about a family of five – I would estimate that with replacements and upgrades we probably spend $3,000 per year or $250.00 per month.

What that doesn’t include are the data plans for the devices – iPad and Apple Watch.  I am going to estimate that increases our monthly cost for five of us by another $100.00
Total Computers and Devices – $350.00 per month

Auto’s – I am going to break this into two parts.  Car Technology and Car Insurance.

Car technology – If you read last weeks blog, you will know that I am somewhat a CF about cars.  (Wine is a different conversation) My 2008 Acura MDX has Bluetooth, a navigation system (which is out of date due to my NEVER paying for the annual update $299.00), smartphone interface and XM Radio.  I did not pay the extra $3,000 for the entertainment system.

However, let’s examine the technology that is on a 2019 Acura MDX.  According to the Acura website I can purchase the following cars:  (each has the disclaimer *Starting at)
Standard –          $44,000
Technology        $49,400
Entertainment   $53,400
Advance             $56,150
A-Spec                $54,900

If you want to go all-in it is going to cost, you 27.6% MORE than the standard.

What are you getting for an extra $12,000?  Check it out here.

I would probably go for the Technology package and pass on the entertainment and greater.  Using 48 months as a baseline for the car.  The additional stuff adds an extra $140.00 per month plus XM radio.  Total per month $160.00

Car Insurance – Recently I quizzed my Insurance guy, Kyle Herring – Liberty Mutual, about why car insurance had risen so much in the last years.  His answer was so simple yet complex.

He started with – “Do you remember when we began working together about 10 years ago?”

Your car had a steel bumper.  If you dinged something you either went to the local mechanic and they either hammered out the dent or you got a new bumper.  Your deductible was $250.00.  I would expect that you just went and got it fixed.

I agreed and he gave me the comparison that I believe we all miss.  Today your “bumper” is some type of fiberglass/plastic to increase your mileage statistics and cannot stand up to a collision above maybe 5 MPH.  When you have a collision, your ENTIRE front wrap-around bumper is totaled.  Typically this will cost at least $2,500 or more and requires a “Technician” to install.

That may be simple but how many of today’s bumpers have you seen that have been involved in a collision and are simply lying by the roadside.

Just imagine what having a family of five with three daughters between 16 and 21 cost per month.  What would that cost today?  $1,500 is my estimate with deductibles that certainly are not $250.00

Adding all the cost of technology up and adding in the family Spotify account.

We would be spending $2,875 per month.

That is a 212% increase.

There are several other items I left out in this technology analysis to get the blog finished and sent out to you.  Thermostats, Security, Music subscriptions and equipment.

Technology is convenient but at what cost?

Take a look at your own family and see what your monthly technology cost is.  I would like to hear from you and see what you might be doing differently?

I will leave you with this question.  Does your 10 years old really need an electronic device?

Welcome to August, I can sense the turning of the page as we head into school, Friday night lights and Saturday afternoon college football.

Michael Tannery CPA CDFA® AIF® ●  CEO
Registered Principal

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