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Sirius XM Prepares To Raise Its Rates

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Satellite radio company Sirius XM is preparing to raise rates come this March. I have a few comments on this development – some comments as a shareholder in the company and some comments as a consumer of their product. I’d be interested to hear what your take is on this topic, too.

As a shareholder, I’m completely in favor of Sirius XM raising their rates because I know that the company has a series of “financing events” coming up this year where billions in existing debt need to be refinanced. The company is working hard to strategically position itself for the coming years so that it is a streamlined company that continues to grow and generate revenue, but this has been a tricky process.

Towards the end of last year, many of the niche music channels that Sirius XM listeners grew accustomed to hearing were removed in favor of condensing the company’s offerings. This attempt to streamline its services by removing duplicate channels has generated mixed results. Some of the condensing made sense. For example, adding the 40’s on 4, 50’s on 5, 60’s on 6, 70’s on 7, 80’s on 8, and 90’s on 9 channels was the only logical move to make with the standard music channels. The same is true of the Sirius XM Love channel which plays love music all day. Having separate Sirius and XM channels for these standardized playlists is a waste of money.

On the other hand, when Sirius’ Back Spin Radio channel was replaced by XM’s Pop2K channel, the Back Spin fans went bonkers. Through a coordinated campaign, they successfully lobbied to get the Back Spin channel brought back to the Sirius XM line-up (fans of the Strobe channel did the same thing). Creating cost synergies makes sense, but so does listening to your fans.

Now, from my standpoint as a consumer of Sirius XM radio some of the pending price increases really piss me off. First, they are removing the free internet feed and adding a $3.00 monthly fee without increasing services. The company’s argument will be that they are upgrading the internet fee to the better, clearer 128k connection. Guess what? I don’t want the better connection! I’m perfectly okay with the lesser connection that I have now because it works fine!

My way around this fee, though, will be to NOT order the internet service and instead purchase a boombox for when I want to listen to Sirius XM in the house. Plus, with the boombox I can pause and rewind the radio because I’ll be using the unit that I have in my car. So take that!

Second, Sirius XM is increasing the additional account fee by $2.00 to $8.99 per additional account. In other words, if I have my master account paying $12.95 per month (that’s $13.86 per month with tax) and I want to add an additional radio to my account, instead of paying the $6.99 rate, I’ll now have to pay the $8.99 rate. For one extra radio, that brings my total monthly payment with tax to $23.48. If I was to throw in the internet radio on top of that, then my monthly payment with tax to $26.68. That’s too much for anyone to pay for a monthly convenience like satellite radio.

Third, I’m greatly concerned that Sirius XM is now finding ways to skirt around the government’s decree that it could not raise rates for the first three years it existed as a merged company. When approving the merger, the government said that basic rates could not be increased for three years. Well, if the basic internet rate was free, then isn’t charging $3.00 per month essentially raising the rate? And isn’t raising the additional radio rate by $2.00 per month essentially raising the rate? I don’t like it and I would imagine that other consumers won’t like this either.

And yet because of my daily commute and the amount of driving that I do, I still find the company well worth the $13.86 that I pay each month. But paying anything more than that? Well, frankly I don’t know if I could justify an additional expense for not getting an additional service.

However, as a committed shareholder I hope that you clicked on one of the links in this entry and purchased a product from Sirius XM! I truly think the company has great long-term potential – I just question whether squeezing more money out of its already committed subscriber base is the right way to realize additional income.

Why The Rest Of The World Should Be In Fear…

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According to one report in an international newspaper, now is the time for the rest of the world to start getting a little bit worried about a rise in American power. No, we’re not coming at you with preemptive wars and no, we’re not going to try nation building in new parts of the globe. No, we’ve got something much more positive in store…for us, at least.

Americans are saving their money again.

That’s right. Americans have finally begun to reverse their trend of spending more money than they earn, at least in some small part. The good folks north of the border at the Globe and Mail ran an article about this returning phenomenon the other day where they shared some historical stats:

Americans are suddenly spending less than they earn. While that might not sound heretical or surprising – how long can you go on spending more money than you earn? – it is an epochal moment for the free-spending United States. After saving an average of more than 7 per cent of disposable income until almost 1990, the United States went into a savings tailspin. Savings rates fell, in fits and starts, from 8 per cent, through 6 per cent in the early 1990s, to 2 per cent around 2000, to the ignominy of a negative savings rate by mid-2005.

Now, however, that is changing rapidly. November economic data showed U.S. savings spiked to 2.8 per cent of disposable income, up from zero at the beginning of 2008. Is it that Americans have suddenly figured out that saving is a good thing, or are they taking some sort of moral stand against profligate spending?

Look at that! At the beginning of 2008, Americans were saving zero percent of their disposable income, but towards the end of the year we were up around three percent. Alright! Go America! What does this mean for the world? The writer of this piece, Paul Kedrosky, gives us some idea…

To put it in context, a U.S. savings rate of minus 1 per cent meant roughly $2-million a minute was flowing out of U.S. consumer savings into other things, mostly consumption, like TVs and home renovations, and so on. Or, on an annual basis, that worked out to almost $1.3-trillion exiting the U.S. banking system for other places.

Turn that around, however, and things get very different, very quickly. At a 3-per-cent savings rate, the United States will see $3.8-trillion showing up next year in the banking system just from domestic savers. At 7 per cent, almost $9-trillion will come rushing in as part of the savings tsunami. It is a fire hose of money pointed at the banks, and it’s just beginning.

Ha! How about that, world? The market is up the creek right now, but America is going to get its value back and we’re going to get it from saving more of our own money. It’s simple cause and effect, right? If you want more money in the banking system without draining more taxpayer dollars, then you PUT IT there via savings accounts.

And that’s just what this country is fixing to do. Let’s go bigger and better than a 3% savings rate. All Americans should sit down and look at their personal annual budget and try to earmark 5% of their annual earnings for savings only. And why not go even bigger and better than that? Budget 5% of your income for savings and another 5% for donations to one or two United States-based charitable organizations of your choosing. Your first 5% helps provide for your future and your second 5% helps to build up another community within your own nation.

If you can afford to do it, then why not?

Is Anyone Really Surprised at this News?

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On Sunday, the CBS News website reported that some $1.6 Billion of the October bailout money was spent on bonuses, stock options, and country club memberships. Some information on this disgusting abuse of taxpayer dollars straight from the article:

The rewards came even at banks where poor results last year foretold the economic crisis that sent them to Washington for a government rescue. Some trimmed their executive compensation due to lagging bank performance, but still forked over multimillion-dollar executive pay packages.

Benefits included cash bonuses, stock options, personal use of company jets and chauffeurs, home security, country club memberships and professional money management, the AP review of federal securities documents found.

The total amount given to nearly 600 executives would cover bailout costs for many of the 116 banks that have so far accepted tax dollars to boost their bottom lines.

Seriously, is anyone surprised by this information? A few months ago I suggested that the bailout would be doomed. Anyone could have seen this coming. Who in their right mind would trust the government with such a gigantic dollar amount? It’s insane. Did everyone forget that this is the government?!

The better way to have used that bailout money would have been to give each American a stipend a la the Bush stimulus check from last spring. Why would this have been a better use of the money? Because regular citizens know where they need financial assistance and how best to spend their tax dollars. When you leave the doling out of $350 billion (only half of the $700 billion bailout has been deployed) to the government, you’re essentially asking for the whole thing to go to shit.

And it has. Great!

Quick Shout Out – GradSpot.com

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Just putting a quick shout out to Chris and the team at GradSpot.com. A few days ago I wrote my Top 5 Ways to Spend Less During the Holidays. This post was created for the GradSpot.com website, though it was previewed on JerseySmarts.com first. Well, the other day the post made its way on to the GradSpot.com main page.

Thanks to Chris and his team for sharing the love! And I suggest that my readers take a trip over to GradSpot.com and take a read – there’s some fun stuff over there!

Top 5 Ways to Spend Less During the Holidays

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Christmas and Hanukkah are rapidly approaching and there are thousands of shoppers who plan on invading the stores over the next ten days to go shopping for the folks on their gift lists. If you’re one of the unfortunate few who have hours of hectic holiday shopping ahead of them, you may want to keep the following money-saving tips in mind as you search for the perfect gift. Bear in mind that these suggestions are in no particular order and that any of these suggestions may rank higher on your personal list.

  1. Shop Earlier! By far, the best thing that you can do to lower your expenses during the holidays is to shop earlier. Yes, there are Black Friday sales and Cyber Monday deals, but if you want to save the big bucks, then you need to start shopping extra early. How early? Try the days following Christmas! After the holiday has come and gone, most retailers slash their prices up to 75% (and sometimes more) on holiday items. This is the perfect time to pick up next year’s holiday cards and decorations at bargain basement prices. You can even stock up on some smaller, generic items like gift tags and bows. If done right, you can spend a few bucks at the local Wal-Mart and come home with enough of these minor items to last a few years – eliminating these costs for the foreseeable future.
  2. Shop Smart. We are blessed to live in the age of the internet – so use it to your advantage! While it is unnecessary to make all of your holiday purchases online, doing so might save you some cash. The real money-saving lure of the internet, though, is the ability to “shop around” from the comfort of your own home. Use the internet to create a shopping strategy and to compare prices. Check to see if the electronics super store can beat the wholesale club or the big box discount store for the digital camera that your brother wants. Once you’ve found the lowest prices on all of your gift list items, map out a strategy for your shopping day. Remember, saving money also means eliminating redundancy in your traveling. There’s no reason to spend more on gasoline because you didn’t pre-map your shopping excursion.
  3. Make a list. And check it twice! One of the textbook strategies to reduce your expenses at the store is to make a list of what you want to pick up at the store and stick to it. If you are going to a store to buy a specific video game or DVD set, then retrieve the item, pay for it, and move on to the next store. The longer you stay in one store, the more likely you are to pick up an extra few items. As an additional point on lists – be sure to ask those who are on your gift list what they want the most this holiday season. There’s no use in buying Mom a new set of lamps for the living room when she really wants a new luxurious bathrobe and spa set from JC Penney.
  4. Re-gift. I should have named this point “have no shame in your game” since that’s the core point. Remember the under the kitchen cabinet combination CD player and radio that you won at the office party? Since you’ll never have a use for such an item you may as well wrap it up and send it off to Aunt Tillie. The point here is that if you have unopened, unused items that you really don’t want and are worthy of being given as a gift, then you can save considerable amounts of money by using the art of re-gifting. Be careful, though. You need to keep your re-gifting worlds separate. Take items that you receive from co-workers and give them to family members and then use items from family members as gifts to friends, etc. When re-gifting, always be sure to maintain a separation between your various social groups.
  5. Pay in cash. While the economy continues tying itself into knots, the major financial institutions are becoming more restrictive with their credit card policies. Some people are waking up and finding that their interest rate has jumped while their credit limit has been decreased. If you are paying for your gifts in cash or with a debit card, then you do not run the risk of having to pay an increased interest rate over the next few months while the market figures itself out. Part of being aware of which items you can pay for in cash is understanding that you may need to restrict your spending this holiday season. In these uncertain economic times, it is important to keep your financial house in order. Sometimes, to keep your own house in order you need to restrict your spending – even during the holiday season. If there is a silver lining in restricting your spending this year it is that there is a strong chance that the people who are buying you gifts are doing the same thing.

These are just a few of the many ways that you can save some money this holiday season. When all else fails, though, remember that this season really isn’t about fancy gifts or expensive trinkets. Family, friends, fellowship, and faith – those are the only things that most people need to enjoy the holiday season. And we’re in luck because they all come free of charge!