The Apple iPhone just was released and there were lines around the corner of fans who just had to have the newest phone. I know a few people who were trying to get off of work early so they could go purchase the new phone. Many of the people who I know who upgraded had working iPhones and their iPhone model wasn’t outdated, but the allure of a new phone made them want to buy. To be honest, the frenzy around the new phone excited me too, I thought about buying a new one initially. However, I decided to stick with my phone (including the small crack on the screen and all), because I didn’t want to sign a new contract. Since I’m not on contract, I’m able to save about $20 on my monthly bill.
- If I let my contract expire, how much will I save per month? A few phone carriers will pass along the savings to customers who are not on contract. The theory behind this is that the carrier will not have to subsidize the cost of a new phone, therefore they pass along the savings to the customers. For me, if I upgraded my phone, I would have to pay $200 for the cost of the new phone and I would give up my $20/month bill credit. At the end of the day, it just wasn’t worth it financially to carry a new phone. This is especially true since I have a 5c, and it was new enough in my eyes.
- Is my phone broken or not functional? If your phone is functional, then you need to be candid and really assess if you are buying your phone because it’s the next hot thing or if you need it. If the answer is that it is the next hot thing, then really think through if you need it or if you can use that money for something that brings you greater happiness.
- What type of contract extension will I have to sign? If you need to sign a contract extension, is it worth it to lose the flexibility if you wanted to change carriers? Not having a contract gives you the flexibility if you want to change carriers for a better rate, coverage, or experience.
- How much would I pay out of pocket? Is this cost in my budget? If you upgrade, and sign a new contract, then the phone will cost you at least $200 depending on your carrier and the cell phone model. However, if you pay out of pocket you can pay as much as $750. Is this money in your budget or is it taking from something else?
- Can I sell or trade in my existing phone? If you trade in your phone, then you can offset a portion of the new cell phone cost. I have a friend who will sell his phone on Craig’s List before he purchases a new phone. This helps him to minimize his out of pocket costs when he upgrades. Also, check with your cell phone carrier also to see if they accept trade-ins.
Bonus: If you have an older model, can you upgrade to the prior model for less money? I know a lot of people who have purchased the model before the newest one because they were getting a new, upgraded phone for less money. Be sure to do a features comparison to see if you would be better off buying the previous version of the phone.
Look, I’m not criticizing those who purchased the new iPhone, because at the end of the day, personal finances are just that – personal. If you aren’t sacrificing your budget and hurting yourself financially, then go for it! However, I definitely want you to think about the reasons for your purchase and if you truly need it.
Good luck, and let me know how it goes!
Aisha Taylor is a #1 Amazon Best Selling Author of the book “5+5 FNPhenomenal Ways to Save $100 This Week Without Killing Your Lifestyle”, and the Founder of FNPhenomenal (Frugal –n- Phenomenal). FNPhenomenal helps women to break the vicious cycle of making money, but not keeping it. FNPhenomenal provides education about money management, empowers women to take control of their lives, develop a healthier relationship with money, and pursue being phenomenal.
Visit Aisha online at www.FNPhenomenal.com
Follow Aisha on Instagram/Twitter: @FNPhenomenal
If this posts inspires you to get your finances in order, don’t let the work stop here. Consider enrolling in one of my online courses. I have one on budgeting and one on saving.