Holy crap. Those were the only words I could muster when I read headlines that the iPhone 8, scheduled for this fall, is slated to be a $1000 cell phone. FOUR. DIGITS. Even as a technology nerd, that’s absolutely insane to me. Yes, I’ll be dropping some serious cash on some new phones in the future (more on that in a future post) but we’ll come in far below that price per phone.
Recently CNET posted an article proclaiming that the iPhone 8’s astronomical price tag was, in fact, no big deal. But if you have any financial sense, it is a big damn deal no matter how you slice it. Here are the reasons CNET is wrong.
“1. Monthly payment plans make price hikes easier to swallow”
I always hated this argument. It’s like walking into a car dealership wanting to buy a car, and being asked how much you want to spend each month. You give me one finite data point – your monthly cost – and I can let you finance basically ANYTHING for that price. The question is how long you have to pay it (and at what interest rate).
That’s why it’s always best to look at how much it’ll actually cost you. And I’m not just talking about the cost of the phone. If you’re on an expensive carrier (Hi, Verizon! Soon to be Bye, Verizon!) you’ll have to sign up for two years of service with them at a rate that you can likely find cheaper elsewhere. So while you may be able to get the actual phone for more, you’re tying yourself down to paying a higher monthly rate than you maybe would be able to elsewhere.
“2. The best iPhone you can buy already costs almost $1,000”
So what? Just because something is expensive doesn’t mean it is no big deal. Not to mention that the ‘best’ iPhone isn’t really something the average consumer needs. Who uses 256GB of storage on their phone? This sort of statement normalizes spending absurd amounts of money on things, and often times going into debt to do so.
“3. Competing superphones are already hitting $1,000 and beyond, too”
More of the same. Status quo isn’t cutting it.
“4. Plenty of more affordable iPhone options will be available”
My only beef with this point is that it doesn’t change the fact that the iPhone 8 still will be an absurd amount of money. Yes, price cuts on other models are great and all, but still soooo damn expensive for iPhone 8.
“5. A high iPhone 8 price could help limit demand — and frustration”
From an economics perspective I absolutely agree here. Supply is short, demand is high, so of course Apple can afford to price some people out of the market for now.
Too Many Phones?
Ultimately, though, I wonder why so many people feel the need to have a new phone every 2 years? I had my old Windows Phone in 2008 for about 3 years. It survived a “belly bath” on my 21st birthday (read: I puked all over it) and it still kept going.
If you cut your phone buying down to every 3 years instead of every 2, you’d save yourself 33% of your phone cost annually. Cutting back to previous model-years instead of the latest and greatest also saves money. Most of the time the release of a new iPhone coincides with a price drop in older models.
8 Ways To Use $1k
I get it – phones are most people’s lifelines to the rest of the world. But before you go and drop a grand on one, think about what else you could do with that money. Here are some actually good uses:
- If you don’t have your emergency fund started, start it now. This $1000 is the baby EF that Dave Ramsey recommends everyone have.
- If you do have an emergency fund, throw it at debt.
- No debt? Great! Add more to your emergency fund.
- Feeling comfortable with that? Awesome, put it into a Roth IRA!
- Already maxing that? Increase your 401(k) contributions to an amount equal to $41 a month.
- Maxing your 401(k) too? Amazing!! Looks like extra money for your HSA!
- Wait – your HSA is ALSO MAXED?? Time for taxable accounts!
- Donate it! If you can’t think of any meaningful way to get $1k off your hands, donate it. If you want to send it to my PayPal just hit me up on Facebook or Twitter.
Would you ever pay $1000 for a phone?