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Wednesday, May 18, 2022

How Much Does It Really Cost to Upgrade Your Phone?

Let’s say you want to purchase an iPhone for $1,000. Tim Cook, Apple’s chief executive, famously likened the exorbitant price tag to the cost of purchasing a cup of coffee every day for a whole year. It’s hardly a huge deal, is it?

Financial advisors, on the other hand, have a distinct perspective. According to some projections, a $1,000 investment in a retirement account today would grow to about $17,000 in 30 years.

In other words, a smartphone in the $700 to $1,000 level (the price range of contemporary smartphones) is a significant investment. More than half of American people do not have enough money to cover three months’ worth of emergency expenditures, according to a study conducted by the Pew Research Center. However, according to a study conducted by the financial website WalletHub, one in every five individuals believes that getting a new phone is worth going into debt for.

Tech firms legitimately claim that our smartphones are the most powerful tools we have for both work and pleasure, and that they are thus well worth the money we spend on them. However, they also engage in number-crunching in order to minimise the price of a new phone. In the case of Samsung, the company has said that the price of its new Galaxy phone is $200 — but that is only true if you trade in a year-old phone in exchange for credit toward the new one. $800 is the actual cost of the item.

As a result, it’s worthwhile to consider phone upgrades in a new perspective in order to assess their financial effect. That may assist us in making well-considered choices so that the relocation does not become routine.

Suze Orman, the financial advisor who once memorably compared people’s coffee habits to “peeing $1 million down the drain,” isn’t blinded by the irony of Mr. Cook’s coffee simile. She believes that the apparently little amount of money that individuals spend carelessly on coffee — and now phone upgrades — may be a stepping stone to poverty.

In an interview with Ms. Orman, presenter of the “Women and Money” podcast, she inquired if she needed a new one every year. “Unquestionably not. Simply said, it’s an outrageous waste of money.”

Ms. Orman expressed concern that the consequences of a phone upgrade might be compounded for most individuals who didn’t have a lot of money in the bank, particularly those who were in debt. She explained that a $1,000 phone purchased with a credit card may end up costing $3,000 in interest by the time it is paid off. Increased debt may also have a negative impact on your credit score, making it more difficult to purchase or rent a house.

Jonathan James
I serve as a Senior Executive Journalist of The National Era
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