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Personal CPI data point (appliances)
Old 08-03-2010, 08:36 PM   #1
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Personal CPI data point (appliances)

I know some people get excited about whether the CPI is understated or not, and I'm kinda on the fence. Electronics of course is tumbling, but since we are replacing some 'durable items' (stove and fridge), I figured I'd dig out my records from 18 years ago.

STOVE: We had an all-in-one oven/stove-top with a second upper oven and an attached exhaust fan. They don't make those anymore, so it's being replaced with a oven/stove-top, and an added u-Wave/Convection/fan unit. So not apples-apples, but ~ 33% more dollars (no inflation adjustment - just sticker prices). Not bad for 18 years, and the new stuff definitely has more capability. 5 burners plus a griddle versus 4. Two high power burners, one simmer burner, heavy cast iron grates, convection modes for both upper/lower ovens, plus the u-Wave (replaces our counter-top unit).

FRIDGE: This one is interesting - These are fairly comparable, but the new one has an ice maker (*see below), and 'clean steel' finish versus plain white. So I guess 'better'. And $ were just 24% more over 18 years - but here's the kicker. The new one uses about 40% of the energy of the old one. In the 'toughest' case ( assume 5% opportunity cost on the delta, and no increase in electric rates), it will be 'cheaper' in year 7. I'd say that is anti-inflationary.

I was a bit surprised (and pleased), I expected these kinds of things to have increased more. Ah, now will they last 18 years (though the fridge did need one repair, the stove a couple, and it had been acting up the past couple years...)?

Oh, and I won't be saving the planet with the energy savings from my 'green' fridge. The old one goes in the basement - beer fridge!

-ERD50


(* ice maker) - thanks to this forum, I was alerted to the warning that an ice maker can burn out the valve if left on with no water pressure. It was pretty buried in the manual, and they have you to turn the fridge on to check things out, and since I don't have water run there, I skipped the ice-maker set up part, and they ship them with the ice maker in the ON position. I got that set to OFF quickly.
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Old 08-03-2010, 10:09 PM   #2
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I am one of those which thinks CPI is inaccurate. Sure the cost goes up, but I often question if the cost really needed to go up (LOL).

My #1 example is cars- each company is doing R&D and adding more and more technology into a car- sure some makes it safer, but things like electric mirrors and windows are not safety features, yet their added technology increases the cost of the car, when nothing suggested the mechanical window or mechanical mirror was not effective.

And the list of features the makers add to justify increasing the cost can get really long... how about add less features, employ fewer people, and keep the cost down?

Good data on the appliances- 18 years between purchases is good!
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Old 08-04-2010, 12:09 AM   #3
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What is the "clean steel" finish, a fancy name for brushed stainless steel? I am thinking of going all SS with the appliances in my retirement home. I just realized a few days ago I've got a big chip in my white kitchen range, and it's only about two years old. My sink is chipped too.

Can't chip stainless steel!
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Old 08-04-2010, 02:47 AM   #4
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I'm one of those who believe that CPI generally understates inflation. However, I'm agnostic on whether this is intentional or whether it's simply a by product of the methodology used to compile the CPI numbers.

Regardless of whether the CPI is or is not understated, my expectation is that my personal cost of living is more likely to end up increasing at a rate which is higher than the general CPI than it is to increase at a lower rate. This is because our spending is weighted towards items which are (on average) (i) less likely to be subject to competitive pressures (e.g. school fees, property taxes, utility bills) or (ii) where technological advances are more likely to add to the costs than reduce them (e.g. health care) or (iii) characterised as luxury items in repsect of which increasing wealth and a growing middle class are likely to push up demand (e.g. business class air travel, good hotels, good wine). The Forbes Cost of Living Extremely Well Index has consistently gone up by much more than the CPI.

Things which seem to get cheaper are mostly manufactured goods like computers, washing machines etc BUT these goods seem to get better and more sophistcated as time goes by and there seem to be more of them to spend money on. Ten years ago, we had one desktop and two mobile phones in our home. Now we have two lap tops (and will likely get a third by year end) and we have a variety of additional toys - Blackberrys, an iPhone, three iPods, a Kindle. Individual items may have got cheaper, but I still feel like I am spending more on these items.

I envy you for getting 18 years on your appliances. I've had to by a new washing machine twice in the last seven years.
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Old 08-04-2010, 07:06 AM   #5
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Originally Posted by traineeinvestor View Post
The Forbes Cost of Living Extremely Well Index has consistently gone up by much more than the CPI.

Individual items may have got cheaper, but I still feel like I am spending more on these items.
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Originally Posted by jIMOh View Post
And the list of features the makers add to justify increasing the cost can get really long... how about add less features, employ fewer people, and keep the cost down?
I would tend to agree. More stuff to spend on, and a lot of prior 'luxury' features are now standard. I don't mind that if I'm given a choice, or if the 'luxury' has come down in price enough to be a non-issue (often the case), but I hate being forced into buying options that I don't want. Often, the bare bones models end up costing as much/more than one with features I don't want, because the full feature ones are the high volume models they put on sale.

But it was still nice to see that these particular items didn't seem bad at all (maybe even good) in terms of inflation.


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What is the "clean steel" finish,... I've got a big chip in my white kitchen range, and it's only about two years old. ...

Can't chip stainless steel!
New GE CleanSteel™ Refrigerators Offer Look of Stainless Without the Fingerprints : Refrigerators : Appliances : Press Releases : GE Consumer & Industrial Press Room

Stainless Steel Appliances Vs. Clean Steel | eHow.com

It got good reviews - but it seems to be carbon steel with some kind of laminate finish over it. I've read that if you scratch it, it could rust. So, time will tell if it's more durable than something that would chip, but so far we like it. It looks like stainless, and apparently is easier to keep clean of fingerprints.


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I envy you for getting 18 years on your appliances. I've had to by a new washing machine twice in the last seven years.
Quote:
Good data on the appliances- 18 years between purchases is good!
Now you are scaring me! We were feeling guilty about not trying to stretch a few more years out of them, since they are working OK (stove has a few quirks, and the fridge is rusted a bit between the doors - I was too conservative with that 'energy saver' switch, and too much condensation was building up there). The new fridge is so well insulated, they don't even have this switch, which is a heater (!) to prevent condensation. If it wasn't for the fact we needed new counter-tops, we probably would get by for a bit longer, but it was time for a full upgrade.

Our upright freezer, washer and dryer are about 23-24 YO and going strong. Zero, absolutely nothing ever done to the washer (I can't believe that myself - family of 5 for most of that time, lots of washing), and a couple little things to the dryer (new heating element, belt and wear plates for the drum). A couple little plastic vent pieces on the freezer.

That's why I question if the new will last as long. Heck, we may not last that long!

-ERD50
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Old 08-04-2010, 08:03 AM   #6
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Originally Posted by ERD50 View Post
Quote:
I envy you for getting 18 years on your appliances. I've had to by a new washing machine twice in the last seven years.
Quote:
Good data on the appliances- 18 years between purchases is good!
Now you are scaring me! We were feeling guilty about not trying to stretch a few more years out of them, since they are working OK (stove has a few quirks, and the fridge is rusted a bit between the doors - I was too conservative with that 'energy saver' switch, and too much condensation was building up there). The new fridge is so well insulated, they don't even have this switch, which is a heater (!) to prevent condensation. If it wasn't for the fact we needed new counter-tops, we probably would get by for a bit longer, but it was time for a full upgrade.

Our upright freezer, washer and dryer are about 23-24 YO and going strong. Zero, absolutely nothing ever done to the washer (I can't believe that myself - family of 5 for most of that time, lots of washing), and a couple little things to the dryer (new heating element, belt and wear plates for the drum). A couple little plastic vent pieces on the freezer.

That's why I question if the new will last as long. Heck, we may not last that long!

-ERD50
18 years is excellent

I have lived in my current city for 14 years. I am on dryer #5 or 6 (one was left at old place when we moved as part of contract). And washer #3 or 4. Refrig #3 (all frig's left at locations when I moved as part of contract).

My data might be skewed by moving 3 times in 14 years, but I still say getting 18 years out of an appliance is a good thing.
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Old 08-04-2010, 08:58 AM   #7
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My position on the CPI isn't necessarily that it's inaccurate overall, but it woefully understates inflation only for those buying the essentials like food, energy, health care, insurance and taxes. People who buy a lot of discretionary big ticket "stuff" probably are feeling the deflationary aspects of the current economy. People of modest means living on COLA'd income streams who buy primarily the basic essentials are feeling considerable inflation and are being told there is none (and thus no COLA).
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Old 08-04-2010, 09:05 AM   #8
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18 years is excellent

I have lived in my current city for 14 years. I am on dryer #5 or 6 (one was left at old place when we moved as part of contract).
What went wrong with the dryers?

Dryers, esp electric ones, are very, very simple devices. There's really no reason one shouldn't last 25-50 years with some routine maintenance (same as I had to do, heater element, belt, wear bushings, plus that felt seal will wear). Timer/switch might break or wear.

The motor can easily last that long. My 22 YO freezer runs 365/24/7 at close to a 50% duty cycle. Let's say 1/3 though - that's over 60,000 hours! A dryer might run 10 hours a week? That's about 1/6th of the time a fridge or freezer motor runs. Should last longer than we do.

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Old 08-04-2010, 09:24 AM   #9
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What went wrong with the dryers?

Dryers, esp electric ones, are very, very simple devices. There's really no reason one shouldn't last 25-50 years with some routine maintenance (same as I had to do, heater element, belt, wear bushings, plus that felt seal will wear). Timer/switch might break or wear.

The motor can easily last that long. My 22 YO freezer runs 365/24/7 at close to a 50% duty cycle. Let's say 1/3 though - that's over 60,000 hours! A dryer might run 10 hours a week? That's about 1/6th of the time a fridge or freezer motor runs. Should last longer than we do.

-ERD50
location 1 apartment

I know I bought one dryer

I think its motor went bad and it was cheaper to get a new one than to replace the motor
I was also single, traveling 50% and did not have much time to deal with getting repair man in and out- just needed a dryer which worked to clean clothes between plane flights.

the second dryer moved with me to condo
location 2
I know I replaced either the washer or dryer, but forget which...

both were left at condo when I sold it as part of contract
location 3
moved into new house, have a front loader and really happy with both.

Its possible I replaced the dyer at condo or maybe not, so my count might be 4 or 5 and not 5 or 6...
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Old 08-04-2010, 10:08 AM   #10
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My position on the CPI isn't necessarily that it's inaccurate overall, but it woefully understates inflation only for those buying the essentials like food, energy, health care, insurance and taxes. People who buy a lot of discretionary big ticket "stuff" probably are feeling the deflationary aspects of the current economy. People of modest means living on COLA'd income streams who buy primarily the basic essentials are feeling considerable inflation and are being told there is none (and thus no COLA).

I agree. Durable goods, especially electronics, have dropped considerably in price likely due to a shift in using low cost labor in developing countries and increasing economies of scale. However, the shift seems to have created an up and coming lower class in developing countries that is moving from farming to manufacturing and is starting to demand more 'basics' such as food and energy from their increased wages. The costs of these items are going up worldwide because of a large increase in demand. The cost of healthcare and taxes are going up, but I think that is due to too much government intervention distorting markets within the US - one would think these are the costs we can control at home but that would require intelligent coordination by lawmakers...
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However, things don't last like they used to
Old 08-04-2010, 10:22 AM   #11
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However, things don't last like they used to

When comes to home appliances my experience is that refrigerators, stoves, washers and dryers do not last as long as they used to. 15 to 20 years on a quality fridge or washer was not unheard of. Today they don't last that long. It's not just a question of price, it's how many years you get out of it.

Cars on the other hand last much longer than they did in the 60's and 70's however their prices have gone up considerably.
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Old 08-05-2010, 05:04 AM   #12
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When comes to home appliances my experience is that refrigerators, stoves, washers and dryers do not last as long as they used to. 15 to 20 years on a quality fridge or washer was not unheard of. Today they don't last that long. It's not just a question of price, it's how many years you get out of it.
A few years ago I replaced a dishwasher after about 7 years. I commented to the salesperson that my Mom's first dishwasher, bought in 1966, had lasted for about 18. He said, "Let me guess: it sounded like a 747 was taking off in your kitchen, and cost more than a month's pay". He was right, too (she'd bought it with money from a car accident claim settlement), plus he forgot the part about needing gloves to handle the detergent.

The new one cost about one-fifth of the 1966 model in inflation-adjusted money, and sometimes we open the door to add something, only to find that it's running (because it's so quiet). The cost per year is way lower than the old clunker. Plus, when it gets replaced, it will be substantially recycled. I'm pretty certain that my Mom's 1966 clunker (literally) is in a landfill somewhere.
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Old 08-05-2010, 05:30 AM   #13
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I read an article recently on electronic sales up, durable goods down. I am getting a new HE front load washing machine delivered tomorrow. I bought the present washer new in 2004 and have had it repaired twice. The last repair was a year ago when I heard a horrible noise and opened the utility room door to find thick smoke. It was a burned belt that galded onto another part. It took a week to schedule the repair, another week to get the part, and another week to get the repairman back. Used two vacation days on this and repair was $200.00. A couple of months ago the machine started to sound noisy again and has escalated to being so loud that even with the door closed, it drowns out the TV in a nearby room and forget talking on the phone.
I have had good luck with most appliances and cars other than this washer.
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Old 08-05-2010, 08:40 AM   #14
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Yes, if these appliances do have a shorter useful life, that affects their 'true cost', and they might not be as reasonable a deal as they seem. With my small sample size, I'll probably never know. Maybe I got lucky with the old ones, maybe I'll be lucky with the new, or they may be 'lemons'.

And I'm not trying to take any stand regarding overall personal CPI. It was just that I would have expected these items to have a higher inflation rate to their sticker price, and it seems they didn't.

I just looked on-line for a more apples-to-apples comparison to our old stove (4 standard burners, no convection mode). Prices have come down significantly I'd say. So a consumer isn't really getting pushed into higher models, unless they want those extra features.

-ERD50
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Old 08-05-2010, 02:39 PM   #15
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What is the "clean steel" finish, a fancy name for brushed stainless steel? I am thinking of going all SS with the appliances in my retirement home. I just realized a few days ago I've got a big chip in my white kitchen range, and it's only about two years old. My sink is chipped too.

Can't chip stainless steel!
We're also replacing appliances as they go before a full kitchen remodel in a year or so, interestingly on the same schedule (~18 years) as the OP. I like the look of stainless steel I must admit and that's how we are going. But be forewarned that it is much harder to keep clean because it shows streaks and marks from condensation. It has to be wiped down with glass cleaner every couple of days. That was not needed with the old painted steel units. Just be aware if that matters to you.

We're also finding that price has only gone up 1/4-1/3 but features are better and energy consumption is down. I would almost call it zero effective increase in 18 years.
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Old 08-05-2010, 09:12 PM   #16
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Yes, if these appliances do have a shorter useful life, that affects their 'true cost', and they might not be as reasonable a deal as they seem. With my small sample size, I'll probably never know. Maybe I got lucky with the old ones, maybe I'll be lucky with the new, or they may be 'lemons'.

I just looked on-line for a more apples-to-apples comparison to our old stove (4 standard burners, no convection mode). Prices have come down significantly I'd say. So a consumer isn't really getting pushed into higher models, unless they want those extra features.
I'm in the process of replacing all the kitchen appliances - oven/micro combo is just about toast, as is the cooktop and dishwasher. The 'fridge still runs okay, but has some other issues and I've sized it up to be moved to the garage as a backup and storage for stuff bought on sale. Nothing is newer than 15 years, and a couple of them are 22 years old.

What I have found is that trying to tell all the players apart in the appliance business is so difficult that I finally made a cheat sheet to know who the actual manufacturer of a certain brand was. Much of the buyouts have meant that some formerly well-respected brands have become a larger company's "low-end" product. Just because you owned brand X in the past, and had good experiences, does not mean that brand X is not now a piece of junk. And things change every six months to a year. It's a minefield out there trying to make a good buy.

What I finally concluded was that there was no way to know that what I was buying was going to last a single decade, much less two. And since we hope to be able to downsize within the next decade, I don't need to buy top-of-the-line stuff anyway. So, I'm going for good deals on "good enough" appliances.

Appliance salesmen and manufacturers are falling all over themselves offering to match prices and/or offer generous rebates.

All said, I think I've picked out decent stuff, and will get a very good price, but I have almost talked myself into at least considering the purchase of some extended warranties.
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I like the look of stainless steel I must admit and that's how we are going. But be forewarned that it is much harder to keep clean because it shows streaks and marks from condensation. It has to be wiped down with glass cleaner every couple of days. That was not needed with the old painted steel units. Just be aware if that matters to you.
The fingerprint/streaking issue was almost a deal killer, and then I found out that they charge extra for the same unit in SS over a color. Our kitchen is black and white with all black appliances, and for the money saved, we've decided to stick with black.
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