In Austin Powers, when Dr. Evil demanded "one meeeellion dollars" to refrain from nuking the world, it got a big laugh. As well it should. A million smackaroos just ain't what it used to be.
These days, a car costs more than the down payment we put on our first condo. A good pair of shoes rivals tuition at a private grade school. Homes in the Hamptons, Hummers, even a decent haircut -- the price of "wow" has gone through the roof.
Want to know what the other half will be unwrapping during the holidays? Just flip through the Neiman Marcus Christmas Book:
- Ten pre-Castro Cuban cigars (with hints of roasted coffee and chocolate) make charming stocking stuffers (at $250) for the jet set.
- Speaking of jets, those sick of bumming rides from friends can order their own Learjet. The low-end, seven-passenger model goes for $7.7 million. (Pilot not included.)
- Won't the kids just squeal when you roll out the new Hummer 24-speed mountain bike ($750)!
- Too tired to get up and air-kiss arriving guests? Send "His and Hers" interactive, remote-controlled robots ($400,000) to the door.
A Rolex watch? Puhleeze. Everyone knows that Blancpain, Breitling, or iced-out Tag Heuer is the modern man's measure of extravagance. Even claiming to be a millionaire is a yawner these days. There are more than 1 million millionaires in the world.
We may be rolling our eyes at $180 crystal monkeys and half a million smackaroos for a collectible Dodge Tomahawk motorcycle that's not even legal to drive. But even the "subway set" is going upscale. Stroll the aisles of Costco and you'll find Prada, Waterford, Raymond Weil alongside the industrial-sized cans of tuna and 50-pack paper towels.
We can all own a piece of "wow" if we want. And, boy, do we want. Have your checkbooks ready.Operators are standing by
From wine to washing machines, bring on the bling-bling. (For the uninitiated, bling-bling signifies the sound of flashy jewelry clinking together.) Marketers have coined a term for our upscale desires -- "new luxury" goods and services. And it is the fastest-growing retail segment. Trading Up: The New American Luxury authors Michael J. Silverstein and Neil Fisk estimate that new luxury products account for 19% ($350 billion) of the $1.8 trillion in annual sales of consumer goods. And it's growing 10% to 15% annually as 96% of shoppers trade up for high-quality, high-performance tchotchkes. We're practically gorging on big-ticket items, spending 20% to 200% more for the Viking range, the organic dog food, Starbucks, and Egyptian cotton sheets when Amana, Alpo, Folgers, and a 50-50 cotton blend used to do just fine. The top categories for trading up are houses, eating out, kitchen appliance, furniture, bedding, cars, home-entertainment systems, shoes, travel, and cookware. Think Coach, Restoration Hardware, Williams-Sonoma. They're the storefronts we've come to expect in every shopping mall.
I was shocked when a friend of mine -- one of the most frugal people I know -- told me she paid $750 for a cashmere coat. She needed a new winter coat. The fit was good. The color was perfect. Clearly, the price was not prohibitive.
We owe, we owe
My friend's outerwear indulgence is just a drop in the bucket. More than one-third of people driving new Mercedes-Benzes earn less than $60,000 a year. Things like vacation homes, second cars, and an adequate home-entertainment systems are considered must-haves. According to a RoperASW survey last February, half of the people surveyed say these items are essential for a good, full life.
Yeah, they might be. But at what price?
On average, we carry eight credit cards per person and have a balance of $8,400 in credit card debt. Twenty percent of our cards are maxed out, reports CardWeb.com, which tracks the lending industry's machinations. And just 40% of Americans pay off their accounts in full at the end of the month. The average line of credit is around $3,500. (A decade ago, it was just $1,800.) The average household pays its lender $1,000 a year in finance charges.
That might not sound like much, but consider that the amount of interest we paid as a nation last year alone could have purchased the entire inventory of 5,000 Jaguar dealerships. Or a 2,000-year endorsement deal with Tiger Woods. Or IBM, the entire company, with $55 billion to spare.
It's not just that we're borrowing more money and paying it back more slowly; it's that we're spending money we used to consider off-limits. Home equity loans are more popular than ever as people borrow against their home to feed their spending binge. Today, average homeowners owe nearly 50% of their home's value. Twenty years ago, that figure stood at 30%.
Can't you just picture the modern-day needlepoint plaque?: "Home, Sweet Credit Line." I didn't see that item listed in the Neiman Marcus Christmas Book.
Don't get me wrong. I'm as tempted as anyone by the adorable $98 Pucci rain boots on page 39. I buy my dog the good food, and pony up for a haircut at a salon frequented by women who make twice what I do.
But when it comes to wowing people, I'm afraid that most head-turning items are out of my price range.
I'm consoled a bit, though, by actual scientific proof that money can't buy happiness. And I'm even more heartened that even the super-rich are catching on. Lamborghini -- the super-car of super-spenders -- reports that the super-rich are buying $30,000 automobiles. Why the trading down? Says longtime ad man Roy Williams: "They can afford the $120,000 difference, they just can't see what makes the Lamborghini worth the extra $120,000."
Dayana Yochim once pined for a Porsche 911 Targa. Then she scaled back her need to impress and settled for a used 1994 Honda Accord. She is the author ofCouples & Cash: How to handle money with your honey.