How Technology Has Changed Our Financial Lives And Affected Society For The Worse

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These days you can use your credit card or debit card just about anywhere. There’s even the technology to swipe credit cards using your cell phone! Imagine the neighborhood kid with a lemonade stand sporting the Visa or MasterCard logos asking “Will that be cash or charge?” Pretty soon you won’t be able to use the excuse “I don’t have any cash on me” to fend off the Girl Scouts selling cookies at your door. Technology is making the use of credit and debit cards more and more convenient each year, but what is the cost of this convenience? To the average consumer, the obvious cost comes in the form of increased spending.

According to Dave Ramsey, author of the bestselling book, Financial Peace, a person will spend about 12%-18% more per month with a credit card than they would have if they used cash. And now that cards contain chips and other technology that allow you to wave the card instead of swiping it, this can cause you to spend an additional 9%!

I’m not implying that the technology itself is bad. I do, however, question the motives behind new technology when it applies to my spending habits. The easier it is to buy something, the more likely I’ll buy on impulse. The more places there are that can accept credit cards, the more likely I’ll spend money even when I’m out of cash. Is it just me, or does it seem that “new technology” is somehow designed to separate you from your money?

Let’s consider some other recent technological advances that negatively affect your financial bottom line.

4 Expensive Technological Advances

1) Satellite Radio – For a monthly subscription cost, I can listen to my favorite radio personalities bypass the FCC regulations and say anything they want. The variety of channels is enormous and the quality of the broadcasts is phenomenal. The only problem is, I’m hardly ever in my car. Also, wasn’t radio meant to be free?

2) Cable/Satellite TV – Same principle. Gone are the days of rabbit ears and static. I can’t think of anybody I know who is watching free television anymore. The most popular shows are on the cable networks anyways. My advice? Cancel cable and stop watching TV to save a ton of money. It’s not as necessary as you think it is!

3) Digital Video Recorders (DVR) – You can get a decent VHS recorder for about $20 to record shows. Compare that to a DVR which costs an additional $10 per month on your cable or satellite service per unit! I must admit though, it is very convenient to record a whole series with one push of a button. Still, it’s not enough for me to justify the ongoing cost.

4) Smartphones – Most people these days have high-speed Internet at home, but then pay for it a second time to have Internet capabilities on their phone too. In fact, most of the popular smartphones, like the iPhone 4, require an Internet package for up to an additional $30 per month. It sure is convenient, but the costs are astronomical.

I really do like new technology, but I can see how easy it is to get carried away with it too. If you’re overpaying on conveniences like these, consider these cost-saving alternatives:

Save Money With These Alternatives

1) Netflix Streaming – Instead of a high subscription cost for premium cable channels and a DVR, why not use Netflix “streaming” and watch movies and TV shows using WiFi or your PlayStation 3. It’s $10-$15 dollars per month instead of $50-$130 per month. The catch is that you have to wait for shows to come out on DVD and for Netflix to allow them to be “streamed.” But you can still pause, fast forward, and rewind just like a DVR. I think it’s worth waiting when you can save that much money. Be patient!

2) Using Cash – Instead of swiping your debit card and credit card (or waving them), use cash. For things you already buy, you’ll spend less money overall. Better yet, if you use a cash envelope system, you’ll have limits on how much you can spend on gas, food, and entertainment. This will prevent the overspending associated with using a credit or debit card.

3) Cheaper Internet Options – Depending on your provider, you probably are paying for more Internet than you need. Some companies offer multiple high-speed bandwidth options and it’s very likely that the cheapest one is good enough for your family. Often, the lowest tier of high-speed Internet can be half the price of the highest tier, which is often the default option on your Internet package. If you’re considering going way down to dial-up, I wouldn’t recommend this unless you’re really strapped for cash.

Final Thoughts

In short, while technology can certainly make our lives easier, there is significant cost for that convenience. For me, I’m content with what I have: A non-smartphone with talk and text, the lowest tier high-speed Internet, basic cable, and a cash envelope system to keep my spending within budget.

What about you? Do you pay too much for technology convenience when there are lower cost or free alternatives with which you could easily get by?

(Photo Credit: Shutterstock)

  • SS4BC

    With my employer discount and the unlimited plan with Sprint, my monthly cell phone bill went from $69/month for a non-smart phone with unlimited texting and 450 minutes to $79/month for unlimited internet/texting/mobile-to-mobile AND insurance. Take away my optional insurance and I’m down to $72/month. Not that much more than a “normal” mobile phone these days.

    • David Bibby

      I’ll admit that smartphones are awesome. I recently sat down next to someone on my last airplane trip who had a smartphone and they were paying more than $200/month for two people. I don’t have an employee discount otherwise I could be persuaded to upgrade.

      Alas… my options here are too expensive for me.

      Thanks for commenting.

  • DebtFreeDaniel

    If we are about to be affected with this changes there is really a chance that we will not get over debt and instead be more addicted to spend money. Today’s technology is pretty much different than the old days. Now, more stores are accepting credit cards for they find it a more convenient way to shop. You can pay now via mobile and internet.

  • Ms Grammar

    The expression is “for the worse” not “for the worst”. Also, I’m really not clear why you feel that these items are negatively impacting everyone’s finances when most people don’t have satellite radio, lots of people still watch the big networks that are free, and most people in America do not have DVRs or smartphones. I don’t have any of these things except basic cable, and I don’t cry myself to sleep at night.

    • David Bibby

      Thanks for catching the typo, Ms. Grammar. If you’re not spending money on the sorts of things I talked about in the article than I applaud you. In my neighborhood, basic cable and high speed internet come included with my HOA dues and yet, some of my neighbors are paying for dish network as well. They don’t get a discount on their dues so they are in essence paying twice for cable TV, just to get a DVR or some premium channels.

      The point I was making is to watch for the trend in new technology. Things that used to be free now come with a monthly cost-component. TV used to be free, now to get ANY kind of reception you need basic cable. Car’s now come with voice activated cell phone integration, for a monthly cost of course. On-star is a great service to have when you get into an accident, but it has a monthly cost as well.

      I have yet to answer this question: Has there been any recent advances in technology that SAVED me money over what I paid for before?

      Thanks for commenting.

  • Justine

    I also wanted to mention for free tv and movies. Often times when you have missed an episode of your favorite show it is posted the next day or sometimes a week later. They also have a decent amount of movies to watch for free as well. Andrew and I were without tv for a year and a half and that was how we watched our favorites. Just something to consider.

    • David Bibby

      I totally forgot all about Hulu! There isn’t another word to describe it other than: AWESOME!

      Last summer when NBC canceled the show: “Breakthrough with Tony Robbins” after airing only two episodes, I was able to watch the remaining ones on Hulu. I can admit it… I’m a nerd and I eat this stuff up.

      Thanks for the support!

  • not given

    My old VHS recorder started eating tapes sometimes so I got a new one of those with the DVD player included by using points earned from one of the consumer research companies. When I got it, I was surprised to find the darn thing doesn’t have a tuner. I had to leave the old broken VCR hooked up the same as always, then run the new kind of cords (red, yellow and white) from the old VCR to the new DVD/VCR and from there to the tv. I have to leave the old VCR on and tuned to the channel I want, I can’t set it to record from 2 different channels unless I’m home (and remember) to change the channel on the old VCR. If the electricity flickers while I’m out, the old VCR shuts off and the new VCR records blue screen, if the clock on it didn’t go back to 0000 like the counter does. Usually the programming date/time stays on and just the clock needs setting. I’m considering a new UPS for my computer and putting the old one on the tv and VCRs because I’m tired of having to reprogram the time on the tv and the new VCR and turn the old VCR back on and turn the closed captioning on the tv back on almost every day.
    I tried setting the old VCR to come on at the right time but it has to have a tape in it and it got to where it would come on, snarl up the tape and shut itself off.
    What the heck happened to including a tuner in products that need them?

    • David Bibby

      Unfortunately new technology also makes older technology obsolete. Today, you can get a VCR from Biglots for about 20 bucks, but it will be missing some features. I’m sure if you looked you can get one with a tuner in it still, at a higher price.

      Also a decent UPS should help with those power surges resetting the VCR.

      Good luck!

      • not given

        Not power surges, power drop outs, tripping the substation. Trip it 3 times in succession and the whole town is out.
        One time we had a truck hit an H structure (at the time power for the entire town came through that structure) on a state highway, it ruined one of the main transformers and the whole town was out 19 hours while some poor city worker drove to Arkansas to get a new one.
        No need for a smart phone here, my son was here for Christmas last year and couldn’t even get ‘G’ much less 3G. You know those 3G coverage maps on the commercials? We’re that big blank spot in the middle of the country.

  • Lissa

    Out of the 4 you mentioned, the only thing I use is the smartphone. I mainly use it for keeping appointments and other personal stuff on there. I do occasionally use it for websurfing, Facebook, twitter, etc. I used to have the unlimited plan but downgraded to the 2GB/month for $25 a month. I’m with AT&T so it’s pretty much mandatory to have a data plan with my Blackberry. We’ve since canceled our cable (and DVR) about a year ago and I don’t miss it one bit. We do use Netflix with streaming so that more than makes up for it.

    One alternative I did with the DVR is that I use EyeTV on my Macbook to record my shows. True, it’s not as convenient as the DVR but it still does the same job.

    • David Bibby

      I would really like to own a smart phone, but haven’t yet justified the increase in cost for the cell phone bill or the cost for the phone itself. Someday…

      With Netflix, and as Justine mentioned, there’s no need to pay for cable or a DVR.

      I’ve never tried EyeTV. That’s great that you can record a show and watch it later, and it didn’t cost you anything!

      Thanks for commenting Lissa!