I got my iPhone in summer of 2008, and I’ve really enjoyed it over the last two years. However, it’s beginning to show its age, so I’ve been considering getting the new iPhone 4. But then I started really thinking about the total cost. The new iPhone 4 is $299, plus the voice and data plans that you have to get as well. If my wife and I both get the phone, that’s an initial outlay of about $700 (with taxes), and then we’ll spend at least $150 / month for voice and data plans (if we go with the cheapest option). As a result, for a 2-year contract, we’ve just spent at least $4300. And for what? So I can check my email when I’m hanging out with friends? So my clients can bug me when I’m out for a run? Hey, I love looking up some obscure trivia while in line at the bank as much as the next guy, but when I step back and really examine the situation, I’m entirely unconvinced that it’s worth the money. It seems like the digital equivalent of fast food: slightly enjoyable in the moment, but ultimately unsatisfying and very unhealthy.
The situation gets really ugly when you consider that you could invest all that money saved. We still need cell phones, but we’d just get prepaid phones and use Skype for calls in the office, which could easily cut our monthly bill from $150 / month down to $50 / month. If we invested that $700 we saved by not buying the phones, and then saved an extra $100 / month at an inflation-adjusted return of 8% over the next 40 years, we’d end up with $366,000 (even after you adjust for inflation). I’m not sure there’s any Tetris clone or Wikipedia entry that’s worth that much to me. This is especially true when I consider that I too often use the phone as a means to escape my current reality, which is detrimental to my desire to be more present, purposeful, and engaged.
Now, you can break just about anything down like this. Enjoying that cup of coffee? Well just think of how much you could have if you never drank coffee again and invested the money instead!! Some financial authors advocate just this, though I think the more salient point is that you should think carefully about what’s really important to you, and look at the true cost of ownership before you flush hundreds of thousands down the toilet without even realizing it.
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oh damn you! you can pry my iphone out of my cold, dead (if slightly less financially solvent) hands!! you can't EXIST as a web 2.0 worker in the valley without one!!
This is exactly what I'm talking about. I'd really prefer a stack of hundreds of thousands of dollars to a cheap piece of plastic that serves as a mediocre status symbol. And there are lots of people in the valley without smartphones (Paul Graham!). There's nothing I do that *requires* me to have a smartphone. It's just a "convenience", the value of which I'm increasingly skeptical.
Well, we still have my razr phone somewhere … help yourself. As for nothing you do "requiring" you to have a smart phone – that is, of course, smart ass-ery not withstanding …
I just did this last year. I didn't have an iPhone, but I stripped my cell plan to the bone. Now for two phones we pay about $60 a month, down from approx. $120. Now I can't check my bank account balance at the urinal, but somehow, I'm living.
I respect that the argument as stated might describe your situation, but it's a little exaggerated and I'm not sure that most people would see the same benefit. By exaggerated – I suspect that if you use a more realistic investment number (4% after inflation would be what you'd get from investing in the S&P500 over the last 40 years). And what are you going to do with your $200K savings at that point? It's money and you spend it on something eventually. It makes sense to save if what you buy later is worth more to you than what you could buy now, but absent that it's just accounting.
Because of my iPhone I spend a lot less time looking for stuff that I might otherwise do, and I make substantively better decisions about a whole range of minor things that I believe adds up to a meaningful improvement in my quality of life. By avoiding bad meals (Yelp) bad turns (google maps) bad prices in bookstores (Amazon) bad movies (rotten tomatoes) I save more than money. The SF iCommute app helps me find a good bus route in the middle of the night, and the NYC version saves a lot of messing with subway maps and, alternately, a lot of potential taxi fare. How much is it worth to not get lost while walking across central park when you're up against a hotel checkout deadline?
The pocket translator, ebooks, and goodreader save me hauling around a bunch of paper when I travel, and the music and movies and podcasts provide cheap and effective entertainment when I'm stuck in an airport or have an hour to kill while I wait to meet someone at a bar. Because of my iPhone I always get a good seat on southwest because I can check in early wherever I happen to be.
On top of all this, my total surfing time at home goes way down because I can do more of my e-chores in downtime at the dentist office, checkout line, and bus stop.
This is just the start of what, for me, is a list of a hundred things that my phone lets me do better and more efficiently which saves me money and time and helps me avoid simple, annoying mistakes.
"4% after inflation would be what you’d get from investing in the S&P500 over the last 40 years"
Can I get a source for that? Specifically taking into account that you'd be dollar-cost-averaging and shifting your asset allocation over time as you near retirement?
"And what are you going to do with your $200K savings at that point? It’s money and you spend it on something eventually."
Call me crazy, but I'd prefer to be able to pay for shelter, food, and healthcare instead of a shiny new gadget.
As for the rest of your stuff, it's awesome that you use your phone to be more productive and efficient. I just don't.
I bought my iPhone outright, 2 years ago – though you don't have that option in the US – so I only paid NZ$1000, instead of NZ$2800 over 2 years.
My monthly phone bill is NZ$39.
In addition, an iOS personal finance app is the reason I have an extra NZ$2k in disposable income every month these days.
My retirement account is doing just fine, thanks…
If only I lived in NZ
I bought my iPhone 2g on eBay for $60 and my last one for $80. I use a prepaid phone , voip, and wifi on my iPhone. I took the money I would have paid for a new iPhone and service and invested it, bought gold and silver a few years back. I'll never go back, can't wait until I can get a 3gs for under $100 in a few months.
I've thought about going this route because I do like having an mp3 player for working out.
Just bought an iPhone 4 last week. The constant emails are a blessing and a curse. I like the Mint App and the facebook alerts. I agree with James partly in that my “e-chores”, if facebook and twitter count as such, are all taken care of in down time, instead of at home on the laptop.
Good post, though.