Since it's in the headlines let's talk about the opportunity cost of the new $1000 i-phone, which you either up front or in commitments to overpriced cellular phone service.
So back to our original financial prepping premise that most Americans would have to go into further debt to cover a $400 dollar emergency. Yet they don't blink at shelling out two and a half times that for this little status symbol.
So let's say you get a $150 smart phone(check Amazon), what can you do with the remaining $850.
For starters if you were to drop it into your Roth IRA you could have $5821.20 in 25 years, not a nest egg by itself but certainly more valuable than the same i-phone well used is likely to be in 25 years.
If you haven't done any previous disaster preparedness you could get a decent all in one four person kit. Which when combined with your $150 phone will get your further than the $1000 phone alone.
If you're wanting to actually own your own house this is 1% of the price of a starter home in many parts of the country. Come up with another $16,500 and avoid paying PMI.
Or if you already have about a thousand dollars squared away because you've been paying attention to other parts of this series but you are still working on paying off things like credit cards. $850 will save you about $14 a month in interest. Are you telling me you don't have something better to do than keeping paying on 2013's Christmas?
Or since Christmas is coming up get yourself the less expensive phone and don't go into debt THIS year for once.
Odysseus, I was the one who asked you several years ago to continue on with some of the Scotch nature advice. Since that time, my wife and I have gotten out of debt, and have a small nest egg. We found that for us, the biggest factor was to never pay interest on a something that went down in value, and to not try to save too much before we got out out of debt. Of course, there is always a need to have a small emergency fund, both in cash and in food items/emergency supplies. But to build a warehouse full of stuff when you still have a mountain of debt is, at least for us, not a good idea. So thank you for continuing this series. I am still learning from you. My wife and I both have so called smart phones. They are 100$ android phones, with the AARP cell phone backed plan. I think we pay about 50$ per month for both of us. We also have a pay as you go phone at home for our daughter for emergencies. No landline. We live as cheaply as possible, with absolutely no debt. We do have a store credit card, because they also have a gas station and we get ten cents per gallon off if we use it to fill up, and we pay it off each month. Our journey has been an interesting one, but worth it.
ReplyDeleteNow that's utility and communication on a budget great job.
DeleteNow keep you ear open for someone to ask how you did it. Sharing knowledge to the willing is one of life's great joys.