Reduce The Cost Of Owning A Phone

Woohoo! My mobile contract reached the all important 20 months a week ago and just like everyone else, I proceeded to renew my long-term relationship with the telco. I also bought myself a new phone at a subsidised price. $430 for a new iPhone 5, the latest version of Apple’s flagship product.

Yeah, I am an Apple fan, after being introduced to the iPhone 4 about 2 years ago. I still remember that it was the coolest, must-have white smartphone in 2011. I felt great owning it but unfortunately, the good feeling only lasted for about half a year (actually shorter than that since a huge number actually upgraded to the same phone soon), when the 4S was launched. In this modern age, electronics become outdated after just a year in the market. But it’s ok, since we get to change phones every 20 months right?

“Yeah, it’s good to give yourself a little treat once in a while and be at the forefront of technology! It’s not just more fun with cooler games but you will also be more productive with the faster processor! Furthermore, there’s no more warranty left on your old yellowish iPhone 4 and it’s really risky to continue using it”

There’s that little consumption devil inside everyone that tempts us to get the newest, sleekest model that we think we deserve. And from the occasional use on my wife’s iPhone 5, I also noticed that the net surfing experience was indeed more pleasant with the additional screen space and the 4G speed yielded a visible improvement in loading pages. But if you shake off that little devil, take a little step back and look at the big scheme of things, you realise that the upgrade’s really minimal. It’s really a non-issue to have to wait 1 more sec for the page to load or scroll slightly longer to finish reading the page. (It’s already a fantasy now compared to those days when I had to limit my messages to 160 characters so as not to bust the 500 SMS quota.)

Moreover, my trusty iPhone 4 was still in a great condition due to my usage patterns (wife says non-usage pattern is probably more appropriate). So it was a no-brainer after I realised that I could only sell my iPhone 4 for less than $300 as compared to almost $800 for the iPhone 5. The upgrade’s not even worth $100 to me, not to mention $500. I decided to take advantage of this situation to offset this fixed, recurring and expensive cost of owning a mobile phone. 

For someone using the basic 3G plan, the monthly charges are about $39 a month. Including Caller-ID charges, it is about $44. If this person purchases a new and relatively high-end phone for $400 every 20 months (my hunch is more than 50% of the population under 35 in Singapore do this), the total cost over the period amounts to $1280. The 10 year cost will be $7,680 and the monthly average is a significant $64.

I am already being conservative over here since I believe many of my peers have opted for the more expensive $59 plans just so they could enjoy a higher subsidy of about $100 for the re-contract handset purchase. Penny wise, pound foolish in every sense.

This cost is high enough to have made me contemplate not carrying a phone when I semi-retire or retire (I actually hate talking on the phone). But I have to admit a smartphone’s really useful. I could google or surf the web, check out the fastest route to my next destination and even share the latest Hello Kitty/Minion I bought on Facebook. (I really think that’s the main utility of those toys, to tell the world that Mummy/boyfriend/husband loves girlgirl enough to brave the long queues.)

So to retain the phone long-term, I came up with some method to lower the effective subscription costs.

Since the four of us (including my siblings) bundled our contracts together, we enjoy the maximum 35% discount from the telco (much higher than those corporate plans that many love to recommend to colleagues). Our 3G plans cost only about $30 monthly instead of the usual $44.

Since we also agree that it’s perfectly sensible and also more environmentally friendly to only upgrade our phones every 30 months, over a period of 10 years, we would only upgrade our handsets 4 times even though we get to re-contract 6 times. 2 phones would be sold at a profit of about $300 each (really quite achievable as we sold the iPhone 5 for $800).

Over 10 years, the net cost of carrying the phone will be $4,600 and the monthly average is a much lower $38 instead. This represents a 40% cost saving and I still enjoy the same level of access into the latest information and communication infrastructure just like everyone else.

Bundling our mobile plans and using our phones for slightly longer than the average person will help to lower our monthly mobile expenses by $40 to make it easier for us to transition into the 15 HWW. You might dismiss this relatively small saving but ponder over it

If we practice 10 of these relatively painless cost cutting measures, they are all going to add up and we can then make a big dent in our overall expenses. I will show you more ways in due time but for now, I hope you will consider acting on this relatively painless suggestion to reduce the costs of owning a phone.

 

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