When is a SmartPhone the Right Financial Decision?
I last purchased a typical cell phone back in October 2008 with a 2 year contract when we returned from China. My old cell phone broke while we were on assignment in China and I needed something once we were back on the ground in US.
I have been eligible for an upgrade for quite some time, but have resisted getting a new phone that required a data plan. Like many, my head danced with the idea of being able to get so much more done while on the road and staying connected. I knew when I bit the bullet to get a basic cell phone years ago that I would never go back to going without one and I know if I upgraded to a smartphone with internet/data access I will never go back. Upgrading to a smartphone is a clear lifestyle upgrade decision that will continue to likely go on for the rest of our working life and not something I want to make without careful planning. At roughly $30/mo or $360/yr for decent data plan - that kind of subscription expense adds up over the course of the next twenty years (about $7.2k).
So after a lot of reflection I felt at some point I would make a decision to get a smartphone. There are clear benefits to me in my current situation - I'm time poor and I feel confident a smartphone would help (hard to quantify though in $). As my children grow up and become more active in extracurriculars, I think a smartphone would give me a bit more freedom to shuttle them around so I foresee the need increasing over the next several years.
However rather than just rush out and buy one, I created a financial goal to focus on - paying off the primary mortgage on our Rental #1. With the mortgage paid off, we'd have an increase in cash flow that would be moving us forward in our financial goals and easily offset the increase in our fixed monthly expenses for a data plan. I've been doing just that - trying to keep my current phone going as long as I can and focusing on eliminating the rental mortgage to increase our cash flow. Im within about 3 years of that goal right now.
Well things came to a head this weekend as my phone died on me. I can't go without my cell phone between my job, rentals, etc - it is a critical link for me. This was the scenario I didn't have a good answer for -- do I try to find a cheap replacement phone or go ahead and upgrade to a smartphone? I made the decision to upgrade today because I need a phone and didn't see a cheap replacement option I was comfortable with. It is unfortunate I didn't have the rental mortgage paid off first, but I feel I need to continue my focus on the financial goal to help offset the small increase in our expenses. When you add this to all our other small monthly expense increases - they add up to a healthy chunk of committed cash flow.
I don't think there is an easy answer for those who are wrestling with the smartphone upgrade decision, but remember it is lifestyle inflation that will add up over the long run. I think the best strategy in the end is to defer the decision as long as you practically can.
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