Monthly payments can be a useful financial tool, or they could be the force of pure evil. They can help a person afford something they normally could not, or they can deceive by masking something’s true cost. I was reminded of the rules of the monthly payment game this week as I dealt with a cracked screen on my cell phone.
I picked up my phone after dropping it face down on the garage floor to find it had many small cracks. Luckily the phone still worked, despite the multitude of cracks. Over the course of several days, the cracks got worse as I pressed on the screen during use. I saw two options:
- Repair The Phone: I checked around at a few phone repair shops, and found that to replace the screen would cost me about $200. Apparently the curved screen on the Galaxy Edge models is more expensive to fix.
- Replace The Phone: I purchased the phone using the AT&T Next program, which means I’ve been making payments on it for about the last 2 years. I still owe about $80 on the phone which I’d have to pay before I could purchase a new phone using the Next program. If I were to do this, and then buy a new phone, I’d also end up paying about $80 in taxes and fees to walk out the door with the new phone. Between paying off the old phone, and the taxes and fees on the new phone I’d have to pay about $160 to get a new phone. The monthly payment on the new phone would be almost identical to my old phone.
Bad Logic
Getting the new phone is obviously the right choice. Purchasing the new phone is less money out of pocket and the monthly payment continues to be as it has been for the last two years. Yay, new phone for me!
Coming To My Senses
The error of my ways can best be described that I fell into the trap that monthly payments are normal and expected. Expecting to have a monthly payment is rooted in expensive purchases that most people are unable to save up and purchase with cash such as a home or a car, although it certainly is possible. But viewing a monthly cell phone payment as normal and expected is a relatively new phenomenon. It is absolutely possible to NOT have a monthly cell phone payment.
The comparison I should have made to myself is:
- Fixing the screen costs $200
- I will own the phone after 3 more payments totaling about $80.
For $280 I will have a paid off phone that works just fine that I could potentially use for years.
- Paying off the old phone is $80
- Sales tax of a new phone is about $80
- I would have to commit to paying $700 for the new model of Samsung’s Galaxy
Getting a new phone would cost me $860.
There is a time and place for financing and making installment payments. However, you have to make the right comparisons and do the right analysis to truly know what you’re committing yourself too.
After taking a fresh look at my situation, I made an appointment for tomorrow to get my screen fixed.
