So the last time I went to get a new phone, this is what happened:
Me: Hi, my phone stopped working this afternoon, can I have a new phone please?
Sprint salesman: Sure, what kind of phone and service agreement are you interested in?
Me: Like an iPhone. Like the cheapest iPhone.
Sprint salesman: Ok, would you like —
Me: Whatever you recommend. Just a phone that works. And a normal service agreement.
Aaaaand…that was how I ended up with a $130/month bill attached to a brand-new 2-year contract. That, combined with not reading something thoroughly before I signed it. Yup, it’s another cautionary tale brought to you by The Yachtless! (Although when I figured this out a full three weeks later, I did call Sprint and begged to have it lowered back down to the $86/month that it had been previously, and the nice lady on the other end of the phone had mercy on me.)
So, if you’ve been following my blog, you may know that I enjoy pretending like money is potatoes. Specifically, Small Potatoes and Big Potatoes. Small potatoes are the pennies and dollars that we save (or earn, or lose) when we make choices like whether to buy the fancy oatmeal or the cheap oatmeal. These choices definitely add up (hint: choose the cheap oatmeal), but they add up fairly slowly. Big Potatoes, in contrast, are the much larger chunks of cash that result from much larger decisions.
This fall I’m job-hunting, which is a Very Big Potato. However, I’m also pondering some small potatoes, and one of these small (or maybe medium-ish?) potatoes is shaped like a smartphone.
Ok, I promise I’ll drop the potato metaphor now!
Everyone, everyone, everyone I have talked to about phones says that Republic Wireless is the way to go. I won’t describe RW’s service options in detail here; you can check out Cash Cow Couple’s review if you want more info. But the point is that no matter what, it’s pretty much going to be cheaper than my current bill of $86/month. However, my Sprint contract isn’t up until November 2016, so if I switched now I’d have to pay an early termination fee, plus with Republic Wireless you are required to buy one of their phones up front. Which means that I need to do some math and figure out the break-even point to see if/when it’s worth it to switch.
So, confession: as a newcomer to the world of finance savviness, I’ve never calculated a break-even point before. I don’t even actually know how to do it, but I figure it’s kind of self-explanatory, so I’m getting out my calculator now. (Well, ok, actually I’m getting out my iPhone. Poor thing – if it only knew I was using its services to decide whether or not to keep it in my life.)
Anyways. Please please please stay here with me while I do this, since I don’t really know how to do it! Here are some numbers (I’m basing this off of the price of the Moto X phone, which I think I’d spring for since it has the best camera and that’s important to me):
As you can see from the table above, which hopefully doesn’t contain any major errors, the thing about Republic Wireless is that your monthly bill depends on how much cell data you actually use; that’s why there are two different possible scenarios above (the green vs. the blue). I’m looking at my Sprint usage report from last month, and it looks like I used…a little over 2GB of data. Is that a lot? That’s probably a lot.
If I continue to use that much, my break-even point (relative to just keeping my current phone and service) is…November 2016. Ugh.
BUT. What if I could somehow drastically reduce my monthly data usage? If I could get it down to 1GB, then my break-even point (again, relative to just keeping my current phone and service) would be August 2016!
Another complication here is that I’m not sure I want to spend $518.95 outright when I’m on the verge of possibly being between jobs…so maybe better to wait until I have my next job in place to make any major decisions?
Now for the philosophical part. Like I said, the break-even point is a totally new thing for me, and I find it to be rather a curious concept. Break-even points are based on the assumption that things will continue to go on as expected for months and months. And, I mean, I do think it’s likely that I’ll want to consistently have a phone for the foreseeable future, and most likely the prices of phones and service plans will not change drastically over the next year. But I just want to recognize, for whatever it’s worth, that any plan founded on the assumption that things will go on as expected is inherently a tiny bit flawed. I’m not saying that it’s bad to have a plan – I’m a definitely a planner, and I think it’s a smart strategy. I just want to recognize that life is unexpected, and plans don’t always work out the way we think they will.
Thanks for helping me through my first break-even point calculation! Hopefully the first in a long, long line of them.
You may notice that I didn’t actually make a decision anywhere in this post about when/whether to switch! Aaaaahhh! What should I do? Should I shell out over $500 right now even though I’m in an uncertain place job-wise? Do you think I can keep my data usage down if I set my mind to it?