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Hello, love your blog!
Thank you! 🙂
I would love your advice with some calculations I’ve been doing, but can’t make up my mind on it.
Would you prefer to buy a new cellphone paying for it full or getting a new plan more expensive than your current one to get the phone for “free”, considering that you would be saving around 6$ per month for the first 24 months with the new, more expensive, plan?
I am sort of a terrible person to ask about this because I don’t have a cellphone of my own, and don’t really get or receive calls, but I can see what you mean in terms of needing it.
I would ask the following…
How much is this phone?
Let’s pretend it is a fancy pants Super Blaster X phone that costs $1500.
How much more expensive is the plan per month?
Let’s say you are paying $10 extra a month after the first 2 years is done.
So, if we look at both options with the assumptions above and on a 5-year plan…
OPTION ONE: New Phone paid out of pocket, Old Plan
Get new phone: $1500
Keep old plan: $144 – extra cost, because you wouldn’t get that $6 savings for the first 2 years on the old plan, right?
$1500 + $144 = $1644 out of pocket
$1644/5 years = $328.80 a year or $27.40 a month
OPTION TWO: New phone for free, New plan
Get a new phone: $0
Get a new plan: $10 extra but only AFTER the first 2 years of saving, so you would only pay for 3 years at an extra $10 / month after the $6 savings for the first 2 years
$10 x 12 months x 3 years = $360
$0 + $360 = $360 extra out of pocket
$360 / 5 years = $72 a year or $6 a month.
The answer is if you are planning on keeping the phone for at least 5 years, then go with the new plan to get the phone for free.
Of course, I am making up numbers.
I don’t know if after 24 months you will be paying $10 more than your old plan, if you went on the new plan, and I also don’t know if your phone is as fancy as I am imagining.
The main point is to take a realistic time frame (5 years), and do the math of the cost of the phone (paid in full or “free” with a new plan), and compare the numbers at the end to see which one seems more cost-efficient.
Hope that helped!