I have been drooling over the iPhone® for quite some time now.
I don’t have one now, so I am not really sure how useful it would be but it sounds very handy. Everything is literally at your fingertips. I could browse, tweet, update my facebook, read office mails and look up pretty much anything, anywhere. Above everything, its just soooo pretty!!! So today again I went over to the Apple iPhone site to look at my precious. I usually don’t go beyond the features/demo page, today I went on to actually see how much it costs, not just the phone, the plan including voice, data and text. Wow! Just wow! The geek in me wanted to know how much I will be spending on it in say 10 years. Just for the fun of it I extended it to 40 yrs. Want to know how much I would be spending on this tiny little magical device – almost 1 million $$$. Yes.
Initial cost of the phone
Initial cost of the phone : $199 + $36 (activation fee) + $ 18 (taxes @ 9%) = $253
For me and my husband : $253 x 2 = $506
Initial cost of the phone (with 2 yr contract) = $506
Cost of the plan per year
Here I have taken the liberal plan, unlimited everything. People might not actually take the unlimited plan; I am not sure about that. But if I am taking it, I would take unlimited data at least, otherwise it kind of beats the point of having the iPhone. I am an internet addict, so if I am buying a phone with internet, I want all of it. Not just rationed data packets. So –
Unlimited voice (up to 2 lines): $119.99
Unlimited Text (Family): $30.00
Unlimited data ($45 X 2): $90.00
Total Cost of the plan per month $239.99
Total Cost of the plan per year $2879.88
Cost to own the iPhone for the 1st year : $3385.88
From the 2nd year : $2879.88
If I use this amount in the compound interest calculator (using 8% growth for 40 yrs)
iphone compound interest
At the end of 40 yrs, I could have close to $1,000,000 if I skip the iPhone!!!
My thoughts
I am not saying calculating how much every single thing cost in life is a good thing. After all we are earning to live comfortable and happily. In the past, if I liked something and if I could afford it at that moment, I always purchased whatever I wanted. Now, my priorities have changed. I have goals and dreams that I want to accomplish, so I know what I can afford at the moment AND how will it affect my future goals. Buying as many gadgets as I can until I empty the bank account worked in the past (thankfully I always stopped when I ran out of money). Now, I think about how the new expense will fit in my regular monthly spending plan. I have fun money set aside which is mostly used for travel and eating out (both of which I love). I try to think if buying this new gadget will give me more happiness than travelling the world and sampling different cuisines. No. So for me the answer is easy. Instead of seeing how much money I have left over, I have learned to think about how much happiness something gives me. That works for me so for now I will happily skip the iPhone.
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Tags: fun
OK, that makes me feel better about not owning an iphone
[...] true cost to own an iphone at WealthInformatics (spoiler: it’s a million bucks if calculated using compound interest [...]
That is a fascinating post! So, the average 25 year old would be a million dollars richer by bypassing the iphone when they hit retirement. I love that!
I will keep using my Voyager phone I think!
I just had to figure my contract after reading this! Except i have a CrackBerry and the amount includes the whole family’s costs. I figured I would hold the phone for another 30 years, and currently pay $140/month. Compound it at a conservative rate of 6.5%…I am looking at $165,450. Even that is an extreme amount of money for someone trying to build wealth.
I still want one…but on a grad student stipend, I just can’t make it work. My basic plan will have to do for now.
Interesting, but that’s not an entirely fair evaluation. You certainly don’t have to have unlimited everything, and I assume you do still have a cell phone(at this point i couldn’t live without one). Instead of calculating the numbers using the iphone’s cost, you can only calculate the difference in cost between that and the alternate plan.
Even using a ton of data, the $25 data is going to be enough for almost everyone. I use my phone a ton and and don’t come close to using 2GB. My wife and I have also have unlimited texting, but don’t have unlimited voice. Our total is about $180 a month. Still expensive, but 60 dollars cheaper. Now take the completely generic plan and subtract from that. If you are going to put unlimited texting on this, it’s only fair to put that on the generic comparison (otherwise you can lose it on the iphone) and we are talking about around ~100-120 a month.
Don’t get me wrong, it is still a bunch of money (on the order of 250k) in 40 years, but not nearly as high. And you got to use an iPhone for 40 years.
P.S. It’s really sweet having the internet in your pocket
@MoneyFunk Yes that is a lot of money. That $140 includes data plan for your family? Sounds like you got a deal, which carrier is that?
My husband can’t understand why
You say 2GB plan will do? I should check out how much that will cost and see if I can make it work.
@SavingDiva I want one too
@Derek We have unlimited voice and text, $60 for both of us. Grandfathered T-mobile family plan. I never had a smart phone before, so I just “assumed” I would need unlimited data plan as well. You are right, I might not need that much and I should have deducted the $60 I would have spent anyway. Even deducting that $60 it would still be a big chunk of money. I would love to have the internet in my pocket
Wow, $60 a month for unlimited text and voice is pretty impressive. That would be tough to add over $100 a month. My previous plan was about $50 for just me with neither unlimited text or voice. I guess I should have been using T-mobile.
As for the data, I use my phone quite a bit and use between 1 – 1.25GB a month. I’m grandfathered on the old unlimited plan for $30, so I doubt I’ll change for $5 off, but if I was getting a new plan I wouldn’t be too concerned about going over 2GB.
[...] this post as my editors choice this week.So to the featured post, Wealth Informatics lays out the truth about owning an iPhone 4 and how much it will really cost you over the years.Just to clear the air, I think the iPhone was [...]