Electronics

The True Cost of Your Wish List

The True Cost of Your Wish List

Buying everything from small gadgets to cars seems to be getting cheaper these days, but owning them isn’t. Taxes and fees on cell phone plans, installation and repair costs on home appliances, and hefty financing fees on cars can now add up to more than 50% of the sticker price of the purchase, according to estimates from experts and data analyzed by SmartMoney.com. And the costs are rising, says Linda Sherry, of consumer advocacy group Consumer Action: Taxes are going up, consumers are keeping appliances and cars longer — and paying more for repairs and poor efficiency. “The result is a real budget buster,” she says.

In all of these niggling little ways, consumers keep paying for things, long after they’ve ostensibly bought them. Buyers rarely take into account these financial ripple effects, which can add up to thousands of additional dollars, says Ed Mierzwinski, consumer program director at the U.S. Public Interest Research Group. For example, over the course of a two-year service contract, smart phone owners may spend an additional $1,000 on taxes, fees, roaming charges, and meatier data plans—all add-ons that are rarely considered when the contract is signed.

This steady drip of ongoing costs isn’t stopping soon. Cell phone users pay about 15% in taxes and fees, on top of the base cost of their plan and usage, up about 2% this year and expected to rise again next year, according to the CTIA-The Wireless Association, a trade group. The average cost of a smartphone app has risen 43% in the last year. And gas prices are up 9%, insurance another 5%. And yes, consumers have noticed: The number of people canceling their lease agreements because of unexpected expenses—like higher insurance or maintenance costs–is up 150% this year over last year.

Of course, sometimes there’s no practical alternative. Renting a smartphone or a home appliance doesn’t make much sense in this day and age; when brakes or tires wear down, replacing them isn’t optional. But that doesn’t mean ownership has to be quite as expensive as it has become. SmartMoney did an analysis of five bigger-ticket items, their true cost, and easy ways to keep the money faucet to a trickle.

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